The American Rescue Plan Act (ARPA) of 2021 Extends Provisions
The American Rescue Plan Act was enacted on March 11,2021 and has substantially changed and extended provisions of The Family First Act (FFCRA) that was to expire on March 31, 2021. Human Resource leaders are awaiting the IRS to provide guidance and interpretation of this new Act. Below is a current summary of what we are able to decipher of the new Act.
Key Points in the ARPA and how the FFCRA Paid Leave credits change on April 1, 2021:
- Employers previously were not required to provide leave under the 1st extension of the FFCRA that was signed in December 2020 that extended FFCRA through March 31, 2021.
– However, you decided whether your business wanted to continue to provide FFCRA leave which is considered as “voluntary.” And not mandatory
- The ARPA allows the same “voluntary” provision and extends the FFCRA through September 30, 2021.
- If you elect to use FFCRA leave tax credits and you are a private sector employer with fewer than 500 employees, benefits will be extended until September 30, 2021.
- Tax credits are available for all of the existing FFCRA qualifying reasons for sick leave in addition to these new reasons:
– Obtaining a COVID vaccination.
– Employee is recovering from illness, injury, condition, or disability related to receiving the vaccination.
– Employee is seeking or waiting for test results or a medical diagnosis for COVID-19, or the employer has requested that the employee obtain a COVID test or diagnosis.
- The above qualifying reasons are a package deal, meaning you cannot pick/choose which you will offer.
- Effective April 1st through September 30th employers may voluntarily offer 10 new days (up to 80 new hours) of paid sick leave to employees.
- The Paid Family Leave portion of FFCRA is also extended through September 30, 2021.
- The Paid Family Leave is also reset with additional paid leave. The new tax credit is reset to $12,000.00 versus the old amount of $10,000.00. The Act also allows use of this credit to apply to:
– Family leave taken for FFCRA emergency paid sick leave reasons.
– Family leave taken for reasons related to COVID-19 testing and vaccination.
- These additional hours/days will also be eligible for the normal tax credits currently offered.
What should your organization do?
- Decide whether to voluntarily offer the new FFCRA leave under ARPA.
- Implement policies and administrative procedures to track the leave time taken by employees.
It’s a significant interval for employers to depend on their HR expert for advice on what actions to take with the FFCRA leave under ARPA. Companies without internal HR support are outsourcing Human Resources firms, like Flex HR, to guide them through these decisive offerings.
There are also numerous changes to administrating COBRA now through September 30, 2021. In a nutshell, there is a lot of re-offering those who did not elect COBRA, a second chance to take the coverage (details are outlined below). The government still needs to complete writing the guidelines for this program. So far it is very clear that companies will pay for the COBRA cost and then get a Medicare tax credit on their quarterly tax filing of their 940’s. HR specialists will achieve this through their payroll department and work with the COBRA TPA’s to manage this program.
Key Points on COBRA Subsidy and Administration:
- Provides a 100% subsidy of COBRA premiums to Assistance Eligible Individuals (AEIs) April 1st to September 30th.
- Medical, dental and vision are all included in this subsidy.
- This applies to all sized employer groups, including those under 20.
- Subsidy is paid through Medicare payroll tax credits for the employer.
- Subsidy provided to AEIs will not affect an individual’s tax liability / count towards gross income.
- An AEI eligible individual is somebody who is eligible for COBRA due to involuntary termination or a reduction in hours.
- Legislation does not specifically state that the involuntary termination or reduction in hours has to related to COVID-19.
- Legislation does exclude termination for gross misconduct, but this is a gray area and very hard to prove.
- AEIs lose eligibility for COBRA subsidy when they become eligible for other group health plan coverage, Medicare, or once COBRA term has expired.
- AEI must notify you, the employer, if he/she gains coverage elsewhere and failure to do so will result in a penalty to the AEI.
- Special enrollment period applies to COBRA as follows:
– Individuals who previously did not elect COBRA as well those who were on COBRA but dropped coverage can jump onto COBRA.
– COBRA would apply for the 18-month period of time with subsidies provided April 1st to September 30th.
– AEIs may choose/switch between plan offerings – they don’t have to continue the plan they were previously enrolled in.
– COBRA start date would be April 1st, not dating back to the original term date or date where hours were reduced.
What should your organization know?
- Your business may be required to provide notice to AEI’s.
- The government indicated a model notice would be released/available on April 10th.
- Your HR representative will manage the COBRA provider and should reach out to each COBRA TPA to coordinate this requirement.
It is highly recommended to opt into these “voluntary” provisions to extend FFCRA. First, to retain your employees. If you don’t elect to continue FFCRA, tell your employees that they follow your existing Paid Time Off policy. Many employees feel that using their vacation time due to being sick with COVID-19 is a slap in the face and the company is not looking out for them. Another reason is that there is no cost for this. Employers get a full tax credit for paying your employees. Thirdly, show your staff you care about them. Any little thing you can do to help them out in this difficult time of the pandemic, the more favorably they will think of the owner(s) and company.
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Flex HR, Inc. is among the top HR outsourcing and consulting firms, based out of the Atlanta, GA area. They were selected Best of Johns Creek Award in the Business Human Resources Consultant category by the Johns Creek Award Program last year, and this year was inducted into the Johns Creek Business Hall of Fame. The Atlanta Journal-Constitution awarded Flex HR “Best of Atlanta Business Profiles” while Outsourcing Gazette magazine listed Flex HR as the “Top Most Promising HR & Staffing Service Vendors.” For 3 years INC Magazine recognized Flex HR as an Inc 5000 “Fastest Growing Privately Held Companies in America”. Jim was also recognized by the North Fulton Chamber of Commerce as the “Small Businessperson of the Year.” Catalyst Magazine acknowledged Flex HR as 1 of 18 Companies CEO’s in Atlanta would like to own.
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