COVID-19 Relief Package (the American Rescue Plan Act)

Latest COVID Relief Package: What Businesses Need to Know

Emily Hartman / March 15, 2021

On March 11, 2021, President Biden signed into law the American Rescue Plan Act to support the American economy and provide $1.9 trillion in relief funds. We dug into the COVID relief bill and what businesses need to know and do.

FFCRA Tax Credits Continue

The Families First Coronavirus Rescue Plan Act (FFCRA) and the requirement employers provide emergency paid sick leave and emergency family and medical leave expired at the end of 2020. Around the same time the FFCRA ended, Congress passed an extension of the tax credit for employers who volunteered to provide emergency leave through March 31, 2021.

The American Response Act extends that tax credit to employers who opt to continue providing FFCRA leave from the end of March to September 30, 2021.

As a refresher, FFCRA-related emergency paid sick leave, and emergency paid family, and medical leave is provided for reasons including:

  • Acquiring an immunization/vaccination for COVID-19
  • Recovering from an illness, injury, disability, or injury related to the COVID-19 immunization
  • Waiting on test or diagnoses results for COVID-19

 

Additionally, there is a non-discrimination rule to ensure that employers consistently implement the leave.

Employers should also note that if they voluntarily provide sick leave, the American Rescue Act allows employers to voluntarily provide an additional ten days of FFCRA paid sick leave, starting April 1, 2021. This is not a requirement.

What Should Businesses Do?

  • Review your current sick leave and family and medical leave practices.
  • Consult with your legal counsel regarding state or local laws with paid sick leave requirements.
  • If you’re not already, determine if your business will want to voluntarily provide emergency paid sick leave to your employees.
  • Consult your legal counsel on how best to implement the leave in a consistent, uniform manner.
  • Continue to monitor for future updates about FFCRA leave through the Biden Administration.

 

Small Business Relief

Food and Beverage Businesses. The American Rescue Plan provides $25 billion to the Small Business Administration for a program targeted to support restaurants and other food and beverage businesses. The grants are available for up to $10 million and can be applied to payroll, mortgage, rent, utilities, and food and beverage expenses.

Paycheck Protection Program (PPP). The Act provides $7 billion to the PPP to help small businesses with the possibility of 100% loan forgiveness. The bill also provides an expansion to certain nonprofit organizations, and some businesses may be eligible for a second loan from this program.

Economic Injury Disaster Loan (EIDL) Advance Program. Businesses with less than 10 employees will be given priority. $15 billion in funds will be distributed to the EIDL Advance program to help businesses experiencing revenue losses resulting from COVID-19. Businesses could receive assistance to help cover financial and operating costs that would otherwise have been if not for the pandemic.

Shuttered Venue Operators Grant (SVOG) Program. This assistance program, which will receive $15 billion in funding, is geared for businesses like live venues, theaters, performing arts centers, museums, etc. Those businesses that qualify for SVOG could also qualify for loans under the PPP.

What Should Employers Do?

  • Consult with your legal counsel to determine if your business may qualify for one of the above programs.

 

Unemployment Benefits

The American Rescue Plan Act extends and increases the previous unemployment benefits that were provided under the CARES Act and the previous stimulus package (expiring this month). There are a few provisions to note:

  • Unemployment benefits will remain at $300/week. The benefits are available until September 6, 2021.
  • The first $10,200 of unemployment received during 2020 will be untaxable for households that have an income of less than $150,000.
  • The Pandemic Unemployment Assistance (PUA) has been extended for those who are self-employed or gig workers and might not otherwise receive state unemployment benefits.

 

What Should Employers Do?

  • Make a note of the September 6 end date and adjust your transition plans accordingly.

 

Multiemployer Union Penions

Under the American Rescue Plan Act, there are no surcharges for employer contributions, no employer PBGC premiums, and withdrawal penalties. Those multiemployer plans that are categorized as “critical and declining” will be given a lump sum by the U.S. Treasury to pay benefits through 2051. There are restrictions on how this money can be used, and the rules around this provision are subject to change.

What Should Employers Do?

  • If your business contributes to one of these plans, regularly request annual estimates of each plan’s withdrawal liability.

 

Other Tax Credits and Benefits

Employee Retention Credit (ERC)

The ERC has been extended through December 31, 2021, and expanded to include some start-up businesses that might not have previously qualified. Those particular businesses have an ERC capped at $50,000/quarter.

Child Tax Credit.

Individuals who earn more than $75,000 or joint returns of $150,000 or more are phased out of the law’s child tax credit. The credits are fully refundable, so those individuals or families who pay little to no tax can still take advantage of this credit either through monthly payment or lump sum.

The bill also temporarily increases the credit amount as follows:

  • Per child ages six through 17: $3,000
  • Per child under the age of six: $3,600

 

COBRA Premiums

The Act provides a 100% COBRA premium subsidy starting April 1, 2021, through September 30, 2021, for employees that have been involuntarily terminated. Employers must send the subsidy along to the individual to pay for COBRA during this time.

There is a provision under the American Rescue Plan Act where terminated employees who doesn’t elect COBRA coverage by April 1, or elected for it and then discontinued it, may elect it again during a special enrollment period that starts on April 1 and ends 60 days after the COBRA notification date was sent.

The coverage could also end early for these individuals if they reach their maximum coverage period before September 2021 or become eligible for another group health plan or Medicare.

The Department of Labor will be publishing model notices within 30 days after the American Rescue Plan Act was enacted.

What Should Employers Do?

  • Review your current COBRA notification process and information.
  • Review and identify any individuals who had a qualifying event in 2020 and could be eligible and elect for COBRA during the subsidy period.
  • Consult with your legal counsel on your plan of action to identify these individuals, your notices, and procedures to ensure compliance with these changes.
  • By May 30, 2021, employers’ COBRA notices must include information about the subsidy and 60-day enrollment period for qualified individuals.
  • Whether as an amended or separate document the following information must be provided: the forms necessary to establish the individuals eligibility for COBRA premium assistance, name, address, phone number to contact the plan administrator, extended election period description, information about the option to enroll in different coverage.
  • A separate expiration notice must be sent to individuals when their premium assistance period will soon expire.
  • Notify individuals when their subsidy will end before September 30, 2021.
  • Monitor the DOL for the release of the Model Cobra Notice.

 

Vaccine Funding

Over $15 billion in the American Rescue Plan Act will go towards improving and expanding the distribution and administration of the COVID-19 vaccine across the county. Initiatives to promote vaccination, increase access, development, manufacturing and more also fall within this effort.

What Should Employers Do?

  • There continue to be no workplace requirements regarding vaccinations.
  • Employers should review their current policies and procedures when it comes to a workforce that is partially vaccinated.
  • Seek your legal counsel to ensure that any changes you make to your policies are procedures that meet with federal, state, and local requirements.

 

Stimulus Payments

The federal government will be sending up to $1,400 in stimulus checks to individuals making less than $75,000 (or $150,000 for those filing jointly).

What is Not Included in the Relief Package

During much debate, a few provisions were eliminated from the final version of the legislation. It is worth noting what items don’t make the cut so that employers aren’t surprised if these issues come back to the forefront in future legislation.

  • $15 minimum wage
  • Phasing out tip credits were initially part of the legislation but were ultimately eliminated.

Emily Hartman, Marketing Manger at KPA
Latest COVID Relief Package: What Businesses Need to Know (kpa.io)