I. FFCRA Tax Credit Extension & New Qualifying Reasons for Leave
Public sector employers and those private sector employers with fewer than 500 employees will be familiar with the first major COVID-19 relief bill, the Families First Coronavirus Response Act (FFCRA), which required covered employers to provide paid leave to employees based upon qualifying COVID-19 related reasons. The law’s mandate to provide leave expired on December 31, 2020, but tax credits were extended through March 31, 2021 for covered employers who voluntarily provided paid leave to employees as though the FFCRA was still in effect.
For those employers voluntarily providing FFCRA leave, ARPA extends the tax credits through September 30, 2021 and adds new qualifying reasons for which employees may take leave. On top of the six existing reasons, ARPA adds three more:
1) The employee is seeking or awaiting the results of a test or diagnosis of COVID-19 and the employee has been exposed to COVID-19 or the employee’s employer has requested the employee obtain the test or diagnosis;
2) The employee is obtaining immunization related to COVID-19; or
3) The employee is recovering from any injury, disability, illness, or condition related to the COVID-19 immunization.
In addition to new qualifying reasons for leave, ARPA also, in effect, refreshes employees’ FFCRA leave balance. Beginning April 1, 2021, employers may claim tax credits equal to ten (10) days of leave for employees who take leave due to one of the six existing qualifying reasons or up to twelve (12) workweeks of leave based upon one of the new qualifying reasons or existing paid FMLA reasons.
II. Federal Unemployment Programs Extended
Special federally funded unemployment compensation programs created by the CARES Act last year will continue through September 6, 2021 under ARPA. Notably, individuals receiving unemployment assistance will continue to receive an additional $300 in federal benefits for weeks of unemployment between December 26, 2020 and September 6, 2021. Caps on the maximum benefits and the duration of benefits available to individuals are also increased under ARPA.
III. COBRA Premiums Subsidized for Six Months
ARPA requires employers, for a limited period, to cover 100% of the employee’s cost of continuing group health coverage under COBRA for up to six months, provided that the employee has lost coverage under the employer’s group health plan due to a reduction in hours or involuntary termination (for reasons other than gross misconduct) and elects COBRA continuation. This subsidy period begins April 1, 2021 and runs through September 30, 2021.
Ultimately, the new subsidy comes from the federal government through the form of quarterly payroll tax credits, but employers must initially front the cost of any COBRA premium owed to a COBRA provider or plan administrator.
Notably, the ARPA subsidy is available only to those individuals whose initial COBRA period ends after April 1, 2021 or would have ended after April 1, 2021 if they had initially elected COBRA coverage or not allowed COBRA coverage to lapse. Beneficiaries who are covered under COBRA on April 1, 2021 do not need to enroll to be covered by the subsidy. However, eligible individuals who did not initially elect COBRA or who let COBRA lapse will have a new special enrollment period, which begins on April 1, 2021 and ends 60 days after delivery of the COBRA notification. The ARPA subsidy does not lengthen the COBRA period. As such, eligible individuals will receive the subsidy only for such portion of their initial COBRA period that occurs between April 1, 2021 and September 30, 2021. We encourage you to consult with your legal counsel or tax advisor for more details on the COBRA subsidies as well as the FFCRA tax credits covered above.
The Department of Labor is expected to issue regulations and guidance regarding the new COBRA provisions, including a model notice, in April.
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These are only a few of the important items contained in ARPA. If you have any questions regarding ARPA, we encourage you to contact any KWW attorney. As Congress and the new Administration sets their sights on the next spending bill – a reported $2 trillion infrastructure package – KWW stands ready to assist employers adapt to the everchanging legal landscape. As always, your workforce is our priority.