The American Rescue Plan Act (ARPA) was signed and passed into law by President Joe Biden on March 11, 2021. The legislation allocates $1.9 trillion in relief in response to the COVID-19 pandemic, including additional and extended relief for workers.
The ARPA is the latest COVID relief effort put forth on the Federal level. Just as with previous COVID-related legislation, Netchex is committed to keeping clients up-to-date and compliant with these new laws. Netchex’s COVID-19 Response Portal is an easy way for employers to institute, track, and remain compliant with these new COVID-19 laws (and have everything flow seamlessly into payroll) all within the Netchex system.
Though it can be expected that more clarity and guidance on this legislation will emerge in the coming weeks, here is what employers need to know now about American Rescue Plan Act:
Extending and expanding the Families First Coronavirus Response Act (FFCRA)
The American Rescue Plan extends the employer tax credit for FFCRA benefits paid voluntarily by businesses through September 30, 2021 for companies employing less than 500 employees.
- It allows the 100% tax credit for up to 10 days (80 hours) of sick leave, even for employees who have already used the 80 hours previously allotted by FFCRA.
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- This does not require an employer to provide additional leave, but allows employers to offer a new pool of leave to employees if they so choose
- The reasons for which an employee can take leave have also been expanded to include:
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- Awaiting the results of a COVID-19 test after exposure or at the employer’s request
- Time off to obtain a COVID-19 vaccine
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- To recover from an illness or condition related to getting the vaccine
- This tax credit is based on an employee’s regular rate of pay
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- Capped at $511/day, if the leave is needed for one of the new reasons related to immunization or testing or because of the employee’s own symptoms, quarantine, or isolation
- Capped at $200/day if the leave is for any other reason
Expanding the Emergency Family and Medical Leave Expansion Act (EFMLEA)
The American Rescue Plan also expands family and medical leave previously set forth under the EFMLEA.
- Increases the aggregate cap for tax credits from $10,000 to $12,000 per employee
- Eliminates the requirement that the first 10 days of expanded family and medical leave is unpaid
- Expands the reasons to take leave, as mentioned above
Under the ARPA, employers are disqualified from receiving FFCRA payroll tax credits if they:
- Fail to comply with the FFCRA, including its anti-retaliation provisions; or
- Discriminate in favor of highly compensated employees, full-time employees, or employees on the basis of employment tenure with respect to leave
Extension of Unemployment Benefits
The ARPA also extends unemployment assistance to individuals who become unemployed or are unable to work due to COVID-19, including:
- Extending the Federal Pandemic Unemployment Compensation program
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- Eligible for an additional $300 per week over and above state benefits through September 6, 2021.
- Extending the Pandemic Unemployment Assistance Program to individuals who do not qualify for “regular” unemployment will also now be allowed for a total of 79 weeks, up from 50.
- CARES Act benefits for those who have exhausted them will be extended through September 6
- Exempting the first $10,200 of unemployment benefits from federal income taxes for household gross income of less than $150,000.
COBRA Continuation Coverage
- The federal government will subsidize the cost of COBRA premiums for employees who lose group health insurance due to involuntary termination or reduction in hours.
- Available from April through the end of September.
- Employers will be required to send a notice of special enrollment period to eligible participants who have not yet elected COBRA or who elected and then discontinued it.
As previously mentioned, more details and guidance from the DOL and other federal institutions are expected. In the meantime, it is important for all businesses to become familiar with the provisions of the American Rescue Plan Act of 2021 and how they affect employees and businesses alike.
Please continue to follow Netchex for more updates on The American Rescue Plan Act and other COVID-related legislation pertaining to businesses.