🗓️ April 2021 Updates
American Rescue Plan Act (ARPA) Contains Employment-related Provisions
On March 11, President Biden signed into the American Rescue Plan Act (ARPA) which contains several provisions intended to relieve employers and families from some of the economic burdens associated with COVID-19. While there are too many components of the Act to list here, I will address the notable ones, as follows:
Emergency Paid Sick Leave (EPSL) and Emergency Family Medical Leave (EFML):
The ARPA extended both EMPL tax credits and EFML tax credits to employers who voluntarily provide EPSL and EFML from April 1st through September 30th, 2021. Employers do not have to provide the leaves described in the FFCRA; but if they do, they can claim tax credits.
The ARPA also extended and updated a number of EPSL and EFML provisions beginning April 1, 2021, as follows:
- Additional Qualifiers: Provides additional reasons leave would qualify for EPSL and EFML: 1) vaccine appointments; 2) complications due to receiving the vaccine; 3) seeking or awaiting the results of a COVID test or diagnosis after an employee has either been exposed to COVID or for an employer request for testing/diagnosis. Additionally, any reason for EPSL is now also a reason for leave under the EFML.
- Expands Tax Credits to Public Bodies: The ARPA expands access to the tax credits to public bodies.
- Hour Reset for EPSL: The previous 80-hour per employee limit for EPSL will reset after March 31, 2021.
- Additional Limit on Credit for EFML: The ARPA increases the limit on the tax credit for EFML to $12,000. Tax credits for EFML will now be available for any reason EPSL is available.
- Federal Employee Eligibility: Federal workers are now eligible for up to 15 weeks of paid leave for COVID-19 related absences for themselves and their families.
- Extension of Statute of Limitations: The ARPA also extends the statute of limitations from three years to five years for both EPSL and EFML tax credits.
- EFML & Pay: The first two weeks of the EFML can now be paid.
Extended Unemployment Benefits:
- Extension of Federal Pandemic Unemployment Assistance: The Federal government’s $300 weekly unemployment benefits have been extended through September 6, 2021. The first $10,200 in unemployment benefits will be tax-free for households earning up to $150,000. The total number of eligible weeks have also increased from 50 weeks to 79 weeks for those individuals who don’t qualify for regular benefits. The bill also extends Pandemic Unemployment Assistance (PUA) for self-employed and gig workers and other workers who don’t qualify for state unemployment benefits.
- Extension of Pandemic Emergency Unemployment Compensation: Extends CARES benefits to individuals that exhausted benefits to September 6, 2021 from 24 weeks up to 53 weeks.
- Extension of Emergency Unemployment Relief for Governmental Entities and Nonprofit Organizations: Increases Federal payments to nonprofits and government agencies from 50% to 75% after March 31, 2021, through September 6, 2021, for the cost of providing unemployment benefits.
Dependent Care FSAs:
- The Dependent Care FSA limit for 2021 from $5,000 to $10,000 (from $2,500 to $5,250 for married filing single). The maximum applies to the taxable year beginning after December 31, 2020, and before an employer can amend its cafeteria plan retroactively to adopt this increased limit, as long as it amends the plan by the end of the plan year and operates consistently with the amendment.
Employee Retention Credit:
- Extends the employee retention credit through December 31, 2021. The employee retention credit was originally enacted in the Coronavirus Aid, Relief, and Economic Security Act, and it allows eligible employers to claim a credit for paying qualified wages to employees.
- Expands eligibility for the credit to new startups that were established after February 15, 2020, and companies if their revenue declined by 90% compared to the same calendar quarter of the previous year. The credit is capped at $50,000 per calendar quarter for the startup and notes we thought might be helpful as you communicate with your customers, followers, and community.
- After June 30, 2021, the credit applies against an employer’s Medicare hospital insurance (HI) taxes rather than Social Security Age, Survivor’s and Disability Insurance (OASDI) taxes. The credit continues to be refundable for employers with Insufficient tax liability.
Expanded Premium Tax Credit Eligibility and Lower Required Contribution Percentages on the Health Insurance Marketplace/Exchange:
- For the taxable years of 2021 and 2022, the Act has expanded eligibility for the premium tax credit for individuals who purchase health insurance on an Exchange. Under the Act, there is no upper-income limit on individuals who are eligible for a premium tax credit for 2021 and 2022 tax years. The premium tax credit is limited to individuals with household income between 100% and 400% of the federal poverty level. The Act also lowers the percentage of household income that individuals must contribute for health insurance coverage purchased on an exchange. In the case of an individual who has received, or has been approved to receive, unemployment compensation for any week beginning during 2021, for that taxable year, an Exchange must not take into account any household income of that individual in excess of 133% of the poverty limit for a family of the size involved.
COBRA Premium Assistance
- What is it? Full premium subsidy (equal to 100% of the COBRA premium) for any employee or dependent who loses group health plan coverage due to an involuntary termination of employment or a reduction in hours. This full premium subsidy, which includes the 2% administration fee, applies for the periods from April 1, 2021 through September 30, 2021, unless terminated earlier on one of the following dates: 1) The date that the individual becomes eligible for another group health plan (group plan offered by a new employer or spouse’s employer); 2) The date that the individual becomes eligible for Medicare; 3) The date that the individual exhausts their maximum COBRA period.
- Who Funds the COBRA Subsidy? During the period of time that the individual is eligible for the subsidy, the individual does not need to pay the COBRA premium. Instead, the premium is advanced by the employer or the insurer and then reimbursed by the government through a refundable tax credit against the taxpayer’s Medicare tax. For fully insured group health plans subject to COBRA and self-funded group health plans, the employer is eligible for the tax credit. For fully insured group health plans not subject to federal COBRA, the insurer is eligible for the tax credit.
- Can An Eligible Individual Change COBRA Options? Yes, an eligible individual may change coverage to a lower-cost coverage option than the individual’s current COBRA coverage option. The person must make the change within 90-days of receiving the revised COBRA election notice, if permitted by the employer sponsoring the plan. However, the lower cost option cannot be an excepted benefit (dental only, or vision only), a qualified small employer health reimbursement arrangement, or a medical FSA.
- Is a Special Election Period Being Offered? ARPA created a special election period for eligible individuals who did not elect COBRA continuation coverage but who would otherwise be eligible for the COBRA subsidy. In addition, there is a special election period for any person who elected COBRA continuation coverage and discontinued the coverage before April 1, 2021 (e.g., those who had an involuntary loss of employment or reduction of hours as far back as 17 months prior to April 1, 2021). These individuals may elect COBRA within 60-days of receiving the required employer notice of the opportunity. The coverage will be effective with the first period of coverage beginning on or after April 1, 2021. Since this notice must be provided by May 31, 2021, this election cannot be made later than July 30, 2021. The coverage will terminate as of the end of the original continuation period (as if the individual elected COBRA during the individual’s initial 60-day election window or had not terminated COBRA early).
Have COBRA Election Notices Changed? Yes, between April 1, 2021 to September 30, 2021, the COBRA election notice must include “clear and understandable language” about the availability of the COBRA premium subsidy, and, if permitted by the employer, the ability for the person to enroll in a different coverage option under the group health plan. ARPA also provides a list of additional content that is required to be included in the notice as follows:
- The forms necessary for establishing eligibility for the COBRA premium subsidy;
- The name, address, and telephone number necessary to contact the plan administrator or another person about the COBRA premium subsidy;
- The individual’s rights to an extended election period under the special election period exception;
- Information about the individual’s obligation to notify the group health plan of eligibility under another group health plan or Medicare;
- A description of the individual’s right to the COBRA premium subsidy; and
- Information about the individual’s right to switch coverage options (if allowed)
For eligible individuals who became entitled to COBRA before April 1, 2021, and individuals who are eligible to elect COBRA under the special election rules, these individuals must be provided a notice with “clear and understandable” language about the COBRA subsidy and the ability to switch coverage options (if allowed) by May 31, 2021.
- Are any other COBRA Notices Required? ARPA provides that the COBRA election notice requirements will be satisfied unless a notice with the following information is provided: 1) A statement that the COBRA premium subsidy will end soon and “prominent identification” of the date that it will end; 2) A statement that the individual may be eligible for coverage without a COBRA premium subsidy through COBRA or another group health plan. The notice is not required if the COBRA premium subsidy is terminated due to eligibility for another group health plan or Medicare. The notice must be provided no more than 45-days and no less than 15 days before the date that the COBRA premium subsidy will end for the individual. The DOL must issue a model notice by 45-days after the enactment of ARPA.
The Consolidated Appropriations Act, 2021
On December 27, 2020, President Trump signed The Consolidated Appropriations Act, 2021 (CAA), which includes many benefits and tax provisions affecting employers, group health plan sponsors, health benefits brokers and health insurance issuers. We have presented the components of the Act in our previous newsletters, but we thought it would be helpful to share another overview:
EEO-1 Extends Reporting Timeline
Earlier this year, the EEOC had stated that private sector employers would be required to submit their workforce data starting in April 21. Since employers were overwhelmed by the impact of COVID-19, there was no EEO-1 filing for 2019 data. Because covered employers were given a pass last year, this year employers must submit workforce data for both 2019 and 2020. The EEOC stated recently, “The EEO-1 Component 1 data collection will open at the end of April 2021 and close in July 2021. The exact closing date will be posted when the data collection launches. Employers will be notified of additional details and how to access the online filing system in April.”
Live Well, Work Well April Newsletter
A free wellness resource to download and share in your workplace. This month’s newsletter topics include:
- Alcohol Awareness Month During the COVID-19 Pandemic
- Moving 11 Minutes Per Day Can Improve Your Health
- Mental Health Support During the Pandemic
- Spring Vegetable Saute Recipe