American Rescue Plan Act (ARPA)
Congress recently passed the American Rescue Plan (ARPA), which went into effect on April 1, 2021. This $1.9 trillion economic stimulus bill includes changes that affect small and large organizations alike and their employees. Employers will need to update policies and practices to comply with these changes. Here are the key takeaways:
Families First Coronavirus Response Act (FFCRA)
The FFCRA, passed in the early days of the Covid-19 pandemic, made employers eligible to receive tax credits for offering employees emergency paid sick leave (EPSL). It also temporarily extended the paid leave covered under the Family and Medical Leave Act (E-FMLA). These provisions were mandatory for businesses with 500 or fewer employees. The ARPA now makes both EPSL and E-FMLA voluntary after December 31, 2020. Other changes include:
EPSL expansion: The 10-day limit for EPSL resets on April 1, 2021, and employers can offer an additional 10 days up until September 30, 2021
E-FMLA expansion: The maximum number of weeks increases from 10 to 12, while the cap rises from $10,000 to $12,000. The maximum an employer can claim in 2021 is $12,000 per employee
Dependent Care Flexible Spending Account
The ARPA has enhanced the Dependent Care FSA in the following ways:
Benefit caps have increased from $5,000 to $10,500 for the 2021 calendar year
The individual amount married individuals can claim rises from $2,500 to $5,250
This increase is not mandatory, and requires the plan to be amended
Affordable Care Act (ACA)
The ARPA lifts the qualifying income limit to receive tax credits for 2021 and 2022 so that more people will be eligible. The percentage of household income individuals must pay for marketplace coverage has been reduced from a cap of 9.83% to 8.5%. There are special enhancements to the credit for individuals receiving unemployment insurance.
The ARPA allows employees who are involuntarily terminated or see a reduction in hours to receive a 100% COBRA subsidy for premiums on group health plans between April 1, 2021, and September 1, 2021. Other changes include:
Qualified beneficiaries (QB) not currently enrolled or who waived coverage have a second chance to take advantage of this subsidy
Employers must give assistance eligible individuals (AEIs) a 60-day window to register starting on April 1, 2021
Employers, insurers or multi-employer plan sponsors must pay the COBRA premiums, but this can be offset by claiming a new federal tax credit
The subsidy is available on COBRA elected coverage through September 30, 2021.
Employee Retention Credit
This program has been extended until December 31, 2021.
California Expanded COVID-19 Supplemental Paid Sick Leave (SPSL)
On March 19, 2021, Governor Newsom signed Senate Bill 95, which reinstates emergency sick leave coverage for some employers and expands the reasons for which employees can take this leave to include time away from work related to Covid-19 vaccination. Employees who are unable to work or telework for an employer due to any of the reasons which qualify the employee for COVID-19 paid sick leave are eligible. This time off under SPSL is in addition to paid time off benefits employees receive by law or policy, e.g., non-COVID statutory paid sick leave or vacation.
This bill is applicable to employers in California with more than 25 employees and requires employers to provide COVID-19 supplemental paid sick leave to covered employees. The bill takes effect immediately and employers have until March 29, 2021 to ensure compliance with the new requirements, at which time the requirements will apply retroactively to January 1, 2021. California’s previous supplemental paid leave expired on December 31, 2020. SB 95 broadens the circumstances under which an employer is required to provide leave and will remain in effect until September 30, 2021. If companies are electing to continue the FFCRA under ARPA as noted above, this legislation runs concurrently.
The ARPA and California SPSL expand many of the programs granted to employers during the pandemic. The above is not an exhaustive list, and there are many qualifiers and moving parts. To see if you qualify for these new benefits and programs, contact your BPM advisor or HR Consulting managing director Stacy Litteral at [email protected].