President Biden signed the American Rescue Plan Act of 2021, a $1.9 trillion stimulus package, into law. This post provides details of the bill which includes stimulus checks for individuals earning below certain income thresholds, aid to state and local governments, and money to support vaccine and testing programs, among other things.
This post provides an overview of the aspects of the plan which specifically affect workplaces.
The mandatory nature of emergency paid sick leave and family leave under the Families First Coronavirus Response Act (FFCRA) which went into effect almost a year ago ended on December 31, 2020. Although the benefit was not extended by the Consolidated Appropriations Act of 2021, enacted at the end of 2020, that bill did leave in place through March 31, 2021 the employer tax credit for FFCRA benefits paid voluntarily by businesses.
The American Rescue Plan extended that tax credit through September 30, 2021 for companies employing less than 500 employees. It allows the 100% tax credit for up to ten days of sick leave even for employees who have already used the 80 hours previously allotted by FFCRA. The reasons for which an employee can take this leave have also been expanded to include time off to obtain a COVID-19 vaccine or to recover from an illness or condition related to getting the vaccine. The amount of the credit ranges from $200 to $511 per day depending upon the reason for the leave.
- The tax credit of $511 applies to leave where the employee is awaiting the results of a COVID-19 test (after exposure or at employer request) or leave related to obtaining the vaccine or recovering from side effects.
- The tax credit of $200 per day ($12,000 maximum) applies to leave taken for all reasons under which emergency family leave could have been taken under FFCRA including care of child whose school or daycare is closed or care of another exposed to or recovering from COVID-19.
- Also noteworthy is the provision that employers will not be eligible for tax credits if there time off benefits favor highly compensated employees. Employers must offer the same benefits to lower paid, part time or newly hired employees.
Employers should therefore update their policies and leave request forms to reflect these changes.
Federal Pandemic Unemployment Assistance
Enhanced benefits to unemployed individuals will continue. Each will be eligible for an additional $300 per week over and above state benefits through September 6, 2021. Benefits to individuals who do not qualify for “regular” unemployment will also now be allowed for a total 79 weeks, up from 50. CARES Act benefits for those who have exhausted them will be extended through September 6 as well.
COBRA Continuation Coverage
The federal government will subsidize the cost of COBRA premiums for employees who lose group health insurance due to an involuntary termination or reduction in hours. The subsidy is 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. Model COBRA notices will be issued by the DOL.
Flexible Spending Accounts
The Act raises the 2021 contribution limits for Dependent Care Flexible Spending Accounts to $10,500 for single taxpayers and $5250 for married individuals filing separately or single filers. The change goes into effect for the plan year beginning after December 31, 2020 and before January 1, 2022.
As stated, we can expect more guidance and model forms from the DOL, but 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.