A: The ARPA included provisions for COBRA Subsidies, Families First Coronavirus Response Act (FFCRA) and Dependent Care Spending Accounts. We have summarized what has been released on each of these provisions below.
COBRA SubsidyARPA included 100% subsidy for COBRA premium commencing April 1, 2021 and ending September 30, 2021 for employees and their covered family members who lost group health coverage due to involuntary termination or reduction of hours. We are awaiting on clarification from the Department of Labor to verify who is eligible for the subsidy. The subsidy does not apply to those who voluntarily quit employment. Some of the key points to the subsidy includes the following:
- The subsidy applies for the time-period April 1, 2021 through September 30, 2021.
- Qualified beneficiaries include those who were eligible for COBRA prior to April 1st and did not elect coverage and those who elected COBRA coverage and subsequently discontinued coverage.
- There will be a special election period for the coverage beginning April 1st and ending 60 days after the date which the COBRA notification was delivered. Qualified beneficiaries will not need to elect to begin COBRA coverage retroactively, prior to April 1st.
- The duration of COBRA coverage will still be measured from the date of the original qualifying event. For example, if an individual was terminated April 1, 2020 due to reduction of hours or loss of work, the COBRA period will still end 18 months from April 1, 2020 or September 30, 2021 regardless if they took COBRA on April 1, 2020 or April 1, 2021.
- The subsidy ends if the individual qualifies for other group coverage or Medicare.
- Employers may permit qualified beneficiaries to change their election to another plan option. This is optional for the employer. If the employer chooses to allow a change, this must be included in the new notice.
- The new COBRA eligibility notices are to be released by the DOL on or before April 10, 2021 (30 days from law).
- When premium assistance ends, employers must send a notice to COBRA participants between 15-45 days in advance of the end of the COBRA assistance. Failure to provide this notice is treated as failure to meet COBRA notice requirements. DOL must release these by April 25, 2021. Employers do not need to provide notice to those who are no longer eligible due to other group health coverage or Medicare eligibility.
- Credit for the subsidy will be applied to payroll taxes much like the FFCRA credits. This will be for 100% of the subsidy. The IRS has not yet released IRC Form 941 or updated the IRS website to reflect these credits.
Employers will need to work with their COBRA administrators to start compiling a list to determine which individuals are eligible for the subsidy. Liberty will provide more information as it becomes available from the DOL and the IRS.
FFCRAThe act still does not require employers to offer paid leave for absences related to COVID-19, but once again extends the tax credit if an employer voluntarily allows for extended FFCRA leave from March 31, 2021 to September 30, 2021. The act also modified the voluntary emergency sick pay leave and the Extended Family Medical Leave (EFML).
Sick PayThe ARPA permits the tax credit for a new bank of 80 hours of FFCRA paid sick leave per full-time employee and the average number of hours worked over a two-week period for part-time employees starting April 1, 2021. Employers can take the credit through their payroll taxes through September 30. 2021. The act also expanded the qualifying reasons for sick leave to include:
- An employee’s inability to work or telework while they are seeking or awaiting the results of a diagnostic test or a medical diagnosis of COVID-19, when the employee has been exposed to COVID-19 or the employer has requested the test;
- Employee obtaining a COVID-19 Vaccine;
- Illness, injury, disability or medical condition related to the COVID-19 vaccine.
Extended Family Medical Leave (EFML)The EFML paid sick leave per employee has been increased to $12,000. EFML can now also be used for the employee if the reason qualifies under the sick leave. Employers will need to make sure to include the EFML in the traditional FMLA. The IRS and DOL have not updated their site to reflect these changes.
Dependent Care Spending AccountsThe Act allows employers to increase elections from $5,000 voluntarily and temporarily to $10,500 per year for 2021. Plans would have until the last day of the plan year to adopt the increase. Employers should work with their administrators to adopt this provision and allow a special enrollment period for this benefit if they decide to elect this provision.
Liberty will provide updates as more information becomes available. Below are two links to additional resources regarding these provisions.
COBRA Subsidy Provisions of the American Rescue Plan ActAmerican Rescue Plan Changes to Employee Leave Under FFCRA