As of Thursday, March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021. The act provides a wide range of extensions, clarifications, and further avenues for funding for many businesses. We’ve summarized the major points below.
New 100% COBRA Premium Subsidy: Beginning April 1, 2021, and ending September 30, 2021, employers with eligible employees (employees who have been involuntarily terminated or whose hours have been reduced due to COVID-19, back to November 2020) could be eligible for the subsidy, which covers the employees’ COBRA premiums. The subsidy will later be applied to the employers’ quarterly taxes.
- Keep in mind, the subsidy is available until the individual’s maximum COBRA coverage period ends, or Sept. 30, 2021 (whichever is earliest).
- Employees must be notified if they are eligible for the subsidy. This includes notification to anyone impacted back to November 2020 – even if they did not elect COBRA coverage at the time. The Department of Labor will provide model notices within 30 days from the date of the enactment.
- What can employers do now? Look for the model notices and connect with their COBRA vendor to review the changes and alert any former employees whose COBRA coverage extends into this six-month period.
Changes to Families First Coronavirus Response Act, including Sick and Family Leave: Tax credits for emergency paid sick leave and family leave have been extended through September 30, 2021. As with the extension of this leave from January 1, 2021, to March 31, 2021 – this appears to be a VOLUNTARY election by employers. It is not mandated. Changes include:
- Wages covered by the family leave credits have been raised from $10,000 to $12,000.
- The Act adds additional reasons employees can qualify for paid sick leave and family leave including obtaining an immunization related to COVID-19 or recovering from any injury, disability, illness, or condition related to such immunization.
- The previous 80-hour per employee limit for paid sick leave will reset after March 31, 2021. Additionally, the previous 10-week per employee limit for paid family leave will reset after March 31, 2021.
Direct Stimulus Payments: A third round of payments will be issued. $1,400 direct payments to individuals making less than $75K, as well as a child tax credit of up to $3,600 depending on the age of the child.
Grants for Restaurants: A program has been established to grant financial support (i.e., to cover payroll costs) for eligible businesses based on decline in gross revenue over 2020.
Extended – The Employee Retention Tax Credit: Employers who have continued to pay wages throughout COVID-19-related closures, or those who have experienced reduced revenue due to the pandemic through December 31, 2021, may be eligible for an extended tax credit.
The American Rescue Plan Act is one of the most wide-spread efforts by the U.S. Government to combat the devastating effects of the COVID-19 pandemic. For further COVID-19-related resources, check out our COVID-19 Employer Resources page or contact us for direct assistance.