How the American Rescue Plan Act (ARPA) Affects Employers
The federal government has passed a third economic stimulus plan to help those affected by COVID-19. The $1.9 trillion plan, known as the American Rescue Plan Act (ARPA), provides another round of stimulus payments to many Americans. However, it also provides additional regulations for employers regarding employee benefits.
The ARPA addresses COBRA payments and FFCRA paid leave issues. Read on to learn more about Employer obligations under the ARPA.
Employers Must Subsidize COBRA Payments
The ARPA addresses an area that has been previously unaddressed in COVID-related economic stimulus packages. Under the ARPA, some employers will need to subsidize COBRA premiums during an involuntary layoff or reduction of hours (voluntary or involuntary). The details are as follows:
- If a company terminates an employee’s employment for any reason not related to gross misconduct, the employee has a right to COBRA to continue employer health benefits. An ‘assistance eligible individual” (AEI) is an employee who chooses to utilize COBRA benefits between April 1, 2021, and September 30, 2021.
- An employer must subsidize the COBRA payments for an AEI 100% during the time mentioned above. However, if the AEI becomes eligible to receive other health coverage, they are no longer AEIs and cannot receive COBRA through subsidized employer payments.
- The subsidies apply to both employers required to provide COBRA and state insurance continuation regulations.
- Employers will receive a refundable tax credit for quarterly payroll taxes for all COBRA subsidies paid within the six-month period. Any credits that are more than the tax bill owed become refundable to the employer.
- Employees that terminated their COBRA coverage or elected not to receive it because they could not afford the premiums can enroll in subsidized COBRA plans starting on April 1, 2021. However, the employee must still be eligible to receive COBRA under normal circumstances during part or all the six-month period.
- Employers must provide one of the following forms of notice to any AEI:
- General Election: Employers must provide AEIs with a general election notice that they may elect to enroll in subsidized COBRA benefits from April 1, 2021, and September 30, 2021.
- Special Election: Employers must provide AEIs that previously declines COBRA coverage or let it lapse of their rights to enroll in the subsidized COBRA enrollment within 60 days of the April 1, 2021 commencement date of the program.
- Subsidy Expiration: AEIs must receive a subsidy expiration notice between 15 and 45 days before the subsidy expires.
More Employees Qualify for FFCRA Paid Leave
The ARPA does not mandate FFCRA leave. It is still voluntary. However, there are several changes to those eligible for leave and how it should be provided. First, the ARPA provides an additional ten days to anyone who exhausted their leave before April 1, 2021, increasing employee pay from $10,000 to $12,000. Additionally, the first two weeks of leave do not have to be unpaid.
FFCRA leaves can also be used for those awaiting employer-requested results to a COVID-19 test, those obtaining the vaccine, and anyone with a vaccine-related illness. Additionally, the Emergency Family Leave Expansion Act section of the FFCRA now covers all the same reasons as the Emergency Paid Sick Leave Act. Therefore, employees with illness or medical concerns or family members with medical issues relating to COVID can qualify for 12 weeks of paid leave. The voluntary tax credits now extend from April 1, 2021, through September 30, 2021.
Employers will not receive the tax credit if they discriminate against employees when providing FFCRA leave or retaliate against employees requiring FFCRA leave.
Now More Businesses Can Obtain a PPP Loan
Under the ARPA, the PPP loan program received an additional $7.25 billion. With the additional money, the program expanded who is eligible to receive a loan. Now the following companies can apply and receive a PPP loan:
- Internet-only news publishers with up to 500 employees
- Labor organizations with up to 300 employees
- Social and Rec Clubs with up to 300 employees
- Fraternal Benefit Societies with up to 300 employees
- Religious Education Groups with up to 300 employees
- 501(c)(3) organizations with up to 500 employees
The program also created the Restaurant Revitalization Fund (a fund to provide grants to restaurants severely impacted by the pandemic) and provides money to help get the vaccine out to the public, reopen schools, and provide the above-mentioned COVID subsidies.
PPP loan applications must be received no later than May 31, 2021.
To learn more about the American Rescue Plan Act’s benefits, contact the experienced HR team at Workplace HCM at 856.334.9711. They will gladly answer your questions and help you implement these changes as needed for your business.
