Below is the description of how the new credit works. I didn't write this - the ARRL VEC did. I give them full credit for writing a very concise and informative description.
The FCC has revised the Amateur Service Part 97 rules to grant partial written examination element credit to holders of expired General, Advanced and Extra licenses. The new rules become effective 30 days after their publication in The Federal Register, which is Monday July 21, 2014.
Expired license holders will not automatically receive credit on that day and may not operate as a new licensee.
The FCC requires former licensees - those falling outside the 2-year grace period - to pass Element 2 (Technician) in order to be relicensed.
To take advantage of the new rule, holders of expired licenses must attend an exam session. There they would present a photo ID and their expired license proof, pay the exam session processing fee ($15 currently) and take the Technician exam.
If an applicant held a General or Advanced license, and has proof, the FCC will afford credit for the General (Element 3) written exam only. If an applicant held an Extra license, and has proof, the FCC will afford credit for the General (Element 3) and Extra (Element 4) written exams. At VE exam sessions it is the applicant (not the VEs or coordinating VEC) who is responsible for supplying the evidence of holding valid expired license credit. Acceptable forms of proof can be found on the Exam Element Credit web page at http://www.arrl.org/exam-element-credit.
If sufficient proof is not presented, the candidate has the option of taking the Tech exam and earning just a new Tech license and then attending another exam session at a later date when they have the proper documentation.
As always, the candidate will have to show a photo ID, present the proof, pay the $15 exam session processing fee and fill out all forms to receive the paper upgrade. The upgrade is not automatic and may NOT be sent directly to the FCC or to the VEC by the candidate.
Expired licensees will not automatically get their old call sign back. The FCC will issue a new sequentially issued call sign. If they desire to obtain their old call sign they may try to do so through the FCC vanity call sign program. However, someone else may have already obtained their old call sign as a vanity call sign and therefore it would not be available.