On March 11, 2021, President Joe Biden signed into law the American Rescue Plan Act of 2021—a $1.9 trillion economic relief package. While the legislation marks the first major legislative victory for President Biden and the administration, it is the sixth federal legislative relief package aimed at addressing the COVID-19 pandemic and its economic fallout. The legislation continues some programs established in these previous efforts, but it also adds some important components. Set forth below are some of the major provisions of the American Rescue Plan Act.
Direct Stimulus Payments
The legislation provides a third round of direct-payment stimulus checks to eligible recipients. Individuals with yearly adjusted gross incomes of $75,000 or less will receive checks in the amount of $1,400 (plus $1,400 for each eligible dependent). Those earning more than $75,000 will receive less than $1,400, and the benefit is completely phased out for individuals earning $80,000 or more.
For married couples, each spouse is entitled to $1,400 ($2,800 for both), but the threshold is a total yearly income of $150,000 or below and phases out for couples earning $160,000 or more each year.
The American Rescue Plan Act extends the three major unemployment insurance programs created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and continued in the Consolidated Appropriations Act (CAA), 2021.
- The Pandemic Unemployment Assistance (PUA) program, which is for workers who are not traditionally eligible for unemployment insurance (such as independent contractors), was set to expire on March 14, 2021. It has now been extended through September 6, 2021, and the number of eligibility weeks have been increased from 50 weeks to 79 weeks.
- Pandemic Emergency Unemployment Compensation (PEUC) provides additional weeks of unemployment insurance benefits to individuals who have exhausted their state unemployment benefits. PEUC was also set to expire on March 14, 2021, but the program has been extended through September 6, 2021. Additionally, eligibility weeks have been increased from 24 weeks to 53 weeks.
- The Federal Pandemic Unemployment Compensation (FPUC) program supplement of $300 per week, which was also set to expire on March 14, 2021, will be extended through September 6, 2021.
Significantly, under the American Rescue Plan Act, benefits recipients who earn less than $150,000 each year are not required to include the first $10,200 of unemployment benefits as income for the 2020 tax year.
Multiemployer Pension Plan Fix
The American Rescue Plan Act establishes a fund for the Pension Benefit Guaranty Corporation to provide financial assistance to “critical and declining” plans to ensure that benefits are paid through the 2051 plan year. This financial assistance is not a loan, and there are no repayment obligations for plans receiving assistance. Withdrawal liability rules remain unchanged, and the legislation does nothing to address the problems that resulted in the multiemployer pension crisis in the first place.
COBRA Coverage Premium Assistance
Beginning April 1, 2021, through September 30, 2021, eligible individuals who have been laid off, furloughed, or had their hours reduced can choose to continue group health benefits without having to pay COBRA premiums.
Affordable Care Act Subsidies
The American Rescue Plan Act provides premium subsidies for individuals purchasing health insurance on the Affordable Care Act exchanges through 2022. The subsidies are scaled as income increases, but, under the law, individuals will not be required to pay more than 8.5 percent of his or her income for a health insurance plan purchased on an exchange.
Employer Tax Credits
The American Rescue Plan Act extends tax credits to offset costs for employers that voluntarily provide Families First Coronavirus Response Act (FFCRA) emergency paid sick leave or expanded family and medical leave to employees. The tax credits are available from April 1, 2021, through September 30, 2021. In addition to the permitted FFCRA emergency sick leave reasons, credits are available for sick leave wages paid when an “employee is seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19 and such employee has been exposed to COVID-19 or the employee’s employer has requested such test or diagnosis, or the employee is obtaining immunization related to COVID-19 or recovering from any injury, disability, illness, or condition related to such immunization.” Similarly, tax credits for emergency paid family leave can be taken for leave granted when an employee cannot work or telework as a result of having to care for a child whose school has been closed due to the pandemic, for the existing six FFCRA sick leave reasons, and for two additional testing and immunization reasons.
Additionally, the employee retention credit established under the CARES Act is continued through December 31, 2021. The provision allows certain businesses to claim a tax credit for qualifying wages paid to employees.
Relief for Small Employers
Two existing Small Business Administration (SBA) CARES Act relief programs receive monetary injections under the American Rescue Plan Act. The Paycheck Protection Program receives another $7.25 billion, though it is not extended beyond its current expiration date of March 31, 2021. Another $15 billion is set aside for the Economic Injury Disaster Loan program.
Additionally, the American Rescue Plan Act appropriates $28.6 billion to establish the “Restaurant Revitalization Fund,” which will also be administered by the SBA. Entities eligible for grants through this fund include restaurants, bars, lounges, caterers, and other concerns with no more than 20 locations that are not publicly traded entities. Money received under the program may be used for “[p]ayroll costs,” rent and mortgage payments, “[u]tilities,” maintenance costs, “[f]ood and beverage expenses,” “[p]aid sick leave,” and other prescribed costs.
CARES Act Section 3610 reimburses federal contractors for paid leave that they provide to certain employees or subcontractors who are unable to work or telework due to the pandemic. The program was extended by the CAA through March 31, 2020. The American Rescue Plan Act further extends the program through September 30, 2021.
DOL Worker Safety Activities
The American Rescue Plan Act appropriates $200 million for the U.S. Department of Labor’s (DOL) Wage and Hour Division, Office of Workers’ Compensation Programs, Office of the Solicitor, Mine Safety and Health Administration, and Occupational Safety and Health Administration (OSHA) “to carry out COVID-19 related worker protection activities, and for the Office of Inspector General for oversight of the Secretary’s activities to prevent, prepare for, and respond to COVID-19.” More specifically, “[n]ot less than” $100 million is reserved for OSHA, and at least $5 million of that amount is for “enforcement activities related to COVID-19 at high risk workplaces including health care, meat and poultry processing facilities, agricultural workplaces and correctional facilities.”
Ogletree Deakins will continue to monitor and report on developments with respect to the COVID-19 pandemic and will post updates in the firm’s Coronavirus (COVID-19) Resource Center as additional information becomes available. Important information for employers is also available via the firm’s webinar and podcast programs.