The American Rescue Plan Act (ARP) was signed into law by President Biden on March 11, 2021. As this is new information, there will be additional guidance from federal agencies in the coming weeks on administering parts of the Act.
You may be most familiar with additional stimulus payments and the expansion of earned income and child tax credits, however there are additional provisions that businesses should be aware of. Listed below are key highlights from the ARP Act for businesses.
Families First Coronavirus Act (FFCRA) Updates
The ARP Act expanded leave under the Families First Coronavirus Act (FFCRA). The mandate to offer leave time associated with the FFCRA was not reinstated, however employers may choose to continue the associated leave for employees and receive tax credits through September 30, 2021. Employers also may choose to reset all employee balances April 1st. This would allow employees to have new leave balances available if they previously exhausted the leave. It is recommended that you reach out to your payroll provider to see how this optional rest is being handled within their system.
In addition, the Emergency Paid Sick Leave Act (EPSLA) is now expanded to include paid time off to receive the COVID-19 vaccine and/or recover from the COVID-19 vaccine. Previously the Emergency Family and Medical Leave Expansion Act (EFMLEA) provided paid time off for childcare related to school closure. This paid family leave time has now been expanded to be utilized for the reasons for EPSLA, including your time in quarantine, time to care for a family member to receive the COVID-19 vaccine and/or recover from the COVID-19 vaccine.
The ARP Act requires a 100% subsidy by employers for employee COBRA premiums April 1, 2021 and September 30, 2021 for assistance eligible individuals, including those who are involuntarily terminated. It is important to note this is not retroactive and only applies to those on COBRA doing the time period. Employers are eligible for a quarterly Medicare tax credit for these subsidies. The ARP Act also extends the COBRA election period and imposes new notice requirements. The US Department of Labor will issue model notices in the coming weeks.
Increase in Dependent Care Assistance
For the 2021 calendar year only, the ARP Act increases the maximum amount that can be excluded from income for qualifying dependent care expenses. Employers who sponsor dependent care flexible spending accounts may amend their plan to allow eligible employees to benefit. Employers should contact their benefits broker or provider for additional information.
Expanded Unemployment Benefits
Unemployment was initially expanded under CARES Act. The supplemental federal unemployment benefit is $300 per week above the state unemployment amount through September 6, 2021 for 74 weeks total unemployment time. There is also a provision for the first $10,200 in 2020 unemployment benefits to be exempt from federal taxes for those that qualify based upon income.
Paycheck Protection Program (PPP)
The changes to the PPP are minor with the ARP Act. The main change is that some non-profit entities (501c3) may now be eligible for the PPP. You cannot double dip against PPP funding, for example you cannot use PPP funds to pay for leave under the FFCRA and then file for tax credits for the same funds.
Small Business Grants
The Act provides availability for grants for pandemic related revenue loss for certain industries. The amount of the grant is limited to $5 million per location or $10 million per entity. These grants may also be diminished by a PPP loan.
Extension to the Employee Retention Credit
The ARP Act extends the Employee Retention Credit created by the CARES Act through December 31, 2021 and expands eligibility to new start-ups, who began by February 15, 2020, and severely financially distressed employers.
We’re Here To Help!
Achilles Group is here to help you navigate through this time. For additional information about how the American Rescue Plan Act effects your business or for additional guidance, please reach out to your designated Achilles Group contact, or call us at 281-469-1800.