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ARPA - American Rescue Plan Act Has Options For Employers

The new law takes effect April 1, 2021, and lasts through September 30, 2021. Like the current version started in January of this year, it remains optional. In addition, tax credits are available but only to employers with fewer than 500 employees and up to certain caps. To receive the tax credit, employers are required to follow the provisions of the FFCRA. While there are many similarities between the new law and the extension of the FFCRA, there are some distinct differences as well. The decision of whether or not to provide this optional leave will depend on individual company circumstances.

Some of the Key Provisions are shared below:

Emergency Paid Sick Leave (EPSL) Changes: Key changes to EPSL, in effect from April 1 through September 30, 2021:

  • Employees can take EPSL for reasons related to vaccination, including time off to get the vaccine and to recover from any related side effects.

  • Employees can take EPSL when seeking or waiting for a COVID-19 diagnosis or test result if they’ve been exposed to COVID-19 or the employer has asked the employee to get a diagnosis or test.

  • Starting April 1st, employees will be able to take an additional 2 weeks of paid leave, depending on their standard work hours. 80 hours for full-time employees and a prorated amount for part-time employees. Any unused hours will not carryover from previous EPSL options.

Emergency Family and Medical Leave (EFMLA) Changes: Key changes to EFMLA, in effect from April 1 through September 30, 2021:

  • EFMLA can now be used for any EPSL reason, in addition to the original childcare reasons. This includes the two new EPSL reasons noted above.

  • The 10-day unpaid waiting period has been eliminated and EFMLA can be used from day one.

  • The aggregate cap on EFMLA has been increased to $12,000 (from $10,000). This change accounts for the additional 10 days of paid time off under the EPSL to account for the eliminating the waiting period.

  • The daily cap of $200 remains the same.

COBRA and Benefits updates:

  • COBRA benefits - If an employee and dependents enrolled in the employer’s group health plans lose coverage if the employee’s work hours are reduced or employment is terminated. They can elect to continue coverage under COBRA.

  • ARPA provides a 100% COBRA subsidy if the employee’s work reduction or termination was involuntary (not if they voluntary resigned). The subsidy applies for up to six months of coverage from April 2021 through September 2021 (unless the individual’s maximum COBRA period expires earlier).

  • If the group plan is subject to COBRA rules, the employer will be required to pay the COBRA premium but then will be reimbursed through a refundable payroll tax credit.

  • Employers with fewer than 20 workers usually are exempt from the federal COBRA rules, but their group medical insurance plans may be subject to a state’s mini-COBRA law. In that case, it appears the subsidy will be administered by the carrier. The carrier will pay the premium and then be reimbursed by the government.

  • Although it takes effect April 1, 2021, employees who were terminated earlier but are still in their COBRA election window also are included. Federal guidance is expected to be released by April 10, including model notices that plans can tailor for their use.

Some additional Notes:

  • The law isn’t clear whether employees are entitled to a new 12-week bank of EFMLA. We will update the FFCRA Laws page as Information becomes available.

  • According to SHRM - If an employee works for an employer that is covered by both the Family and Medical Leave Act (FMLA) and the ARPA extended and expanded credits, the employee may be entitled to traditional FMLA leave and the EPSL tax credit may also be available, depending on how sick the employee or family member is with COVID-19.

  • ARPA also states non-discrimination requirements, so as not to favor highly-comped employees or employees based on how long employees have worked for the employer. These options would be accessible by all employees under equal circumstances

  • Note that the COBRA subsidy doesn’t apply during FFCRA leaves because employees are entitled to maintain their health insurance during those leaves on the same terms as though they had continued to work.

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