The American Rescue Plan Act (ARPA) expanded employee benefits in two key areas: 1) employers with fewer than 500 employees may voluntarily extend leave provisions under the Families First Coronavirus Response Act (FFCRA), and 2) federal COBRA subsidies. Schools should take note of some key modifications to the FFCRA as they decide whether to extend leave provisions, and understand key compliance obligations under COBRA.
Key Changes to the FFCRA
The ARPA extends tax credits for educational institutions that voluntarily choose to extend FFCRA leave benefits for qualifying COVID-19-related absences. Employers will receive a tax credit on the wages paid to employees for leave taken in accordance with the ARPA from April 1, 2021 through September 30, 2021. Here are some key modifications:
- Schools may decide to extend the leave benefits for a shorter period of time (i.e., through June 30, 2021). In addition, employers have a choice between extending just Emergency Paid Sick Leave (EPSL), just Emergency Family and Medical Leave (EFML), or both.
- EPSL and EFML can now be taken for additional reasons, in addition to the qualifying reasons already provided under the FFCRA. Now the list of reasons for taking EPSL or EFML includes:
- To receive the COVID-19 vaccine;
- To recover from a condition, illness, or disability related to the COVID-19 vaccine; and
- To seek or await results of a COVID-19 test or diagnosis.
- If an employer extends EPSL, employees get a new bank of 10 days of leave; however, unused time from the first round of EPSL is forfeited. The ARPA does not, however, provide additional time for EFML. Employees are still limited to a total of 12 weeks of EFML, including any balance used prior to April 1, 2021.
- Under the ARPA, the first 10 days of EFML are now paid, for a total of 12 paid weeks of EFML. The tax credit continues to be capped at $200 of qualified wages per day for these additional paid days. Accordingly, schools are now eligible for tax credits on wages of up to $12,000 per employee for employees who take paid EFML.
- Schools that choose to offer FFCRA leave on a voluntary basis must provide leave to all employees without discriminating against certain categories of workers. The tax credit is not available to employers that discriminate in favor of highly compensated employees; full-time employees; or certain employees based on tenure.
Federal COBRA Subsidies
Under the ARPA, from April 1, 2021 through September 30, 2021, the federal government will subsidize COBRA premiums for medical, dental, and vision plans for certain eligible employees for six months. The U.S. Department of Labor issued new model COBRA notices on April 7, 2021. Employees are eligible for the subsidy if:
- The employee was involuntarily terminated or had hours reduced AND
- The employee was enrolled in COBRA at any time between April 1, 2021 and September 30, 2021 OR
- The employee would be enrolled in COBRA as of April 1, 2021 if they had elected it when it was offered. These individuals must receive a second-chance election notice.
Employees are no longer entitled to the subsidy when they become eligible for coverage under another employer's group health plan or Medicare. The subsidy does not expand an individual's overall COBRA coverage period.
Schools should speak with their COBRA administrators and ensure that notice of the opportunity to elect subsidized coverage is provided to individuals on or before May 31, 2021. Individuals have 60 days from the date of notice to elect coverage. In addition, schools must provide individuals with a Notice of Expiration of Period of Premium Assistance 15-45 days before the expiration of the subsidy, providing notice of the expiration date and advising the individual that they may be eligible for unsubsidized COBRA coverage or other group health plan coverage.