The American Rescue Plan Act (ARPA) and Provisions Affecting Employers

The American Rescue Plan Act photo of American flag
The American Rescue Plan Act (ARPA) was signed into law by President Joe Biden on March 11, 2021. Here is an overview of three temporary provisions affecting employers. These provisions are effective April 1, 2021.

 

COBRA Premiums — Extended Subsidies

Assistance Eligible Individuals (AEIs) who lost health coverage (including dental and vision coverage) due to their or their family member’s involuntary termination or reduction in hours may receive COBRA coverage with a premium reduction of 100% from April 1, 2021, through September 30, 2021.

 

FMLA — Extended Tax Credits for Employers

ARPA extends the Families First Coronavirus Response Act (FFCRA) employer payroll tax credits for paid sick and paid family leave for six months, from March 31, 2021, through September 30, 2021. It also adds additional qualifying reasons for employees to take the paid leaves:

  • The employee obtains an immunization related to COVID-19.
  • The employee is recovering from a condition, illness, or disability related to the vaccination.
  • The employee is seeking or awaiting the results of a COVID-19 test or diagnosis (including where the employer has requested the test or diagnosis).

 

Dependent Care FSA — Increased Contribution Limit

Plan Sponsors will be allowed to increase the annual employee contribution limit in a Dependent Care FSA (DCFSA) plan from $5,000 to $10,500 for the 2021 calendar year* (1/1/21-12/31/21). This allowable election amount is available on top of any carried over funds from the 2020 plan year.

*Plans that run off-calendar years will need to make sure that contributions are set in such a way as to not exceed the new $10,500 cap for the 2021 calendar year.

 

Additional Questions?

If you utilize the services of a Third-Party Administrator, please contact your Administrator directly with questions.

 

Additional Resources

If you don’t have a Third-Party Administrator, please refer to the links below for articles and webinars curated for you that provide additional information for your review.

More information will be released by the Department of Labor in the coming days.

The American Rescue Plan Act photo of gears and light bulb idea resources

Links to Resources

Dykema Article:  How Does the American Rescue Plan Affect Welfare Benefit Plans?

Clark Hill Article:  April 1 Brings Major COBRA Changes Under ARPA

BASIC Article:  American Rescue Plan Act Recap

Paychex Article:  COBRA Continuation Coverage to be Subsidized 100% for Qualified Individuals Under ARPA

Dickinson Wright Article:  New COBRA Subsidy Available April 1, 2021

Larry Grudzien, Attorney-At-Law PDF:  The American Rescue Act — Important Provisions for Employers

U.S. Department of Labor News Release:  New Guidance to States on Implementing American Rescue Plan Act Unemployment Insurance Provisions

 

Disclaimer
The information, examples, and suggestions presented in this material have been developed from sources believed to be reliable, from a variety of sources including industry, regulatory and legislative. They should not be construed as legal or other professional advice.

This material is for illustrative purposes and is not intended to constitute a contract. This material is presented for educational purposes only.

Please consult your employment law attorney with specific business questions.

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