The American Rescue Plan Act (ARPA) includes a number of important provisions for employers that will provide much needed relief to small business owners across the United States. ARPA has extended and expanded the tax credits available through the Families First Coronavirus Response Act (FFCRA) to employers who chose voluntarily to extend paid COVID-19-related leave to their employees through September 19th, 2021.

The US Department of Labor website has information and guidance documents which explore these extended benefits in detail.

Continuation of Enhanced Unemployment Insurance Benefits

ARPA has extended some federal unemployment benefits through September 6, 2021. 

• Federal Supplemental Unemployment Insurance Benefit of $300/week has been extended.

• Pandemic Unemployment Assistance grants benefits to those who would not qualify for regular unemployment benefits.

• Pandemic Emergency Unemployment Compensation gives financial relief to those who have exhausted their state unemployment benefits.

Healthcare Provisions

The American Rescue Plan Act includes a number of health coverage provisions that alleviate concerns around healthcare for American families.

COBRA Premium Subsidies

ARPA subsidizes 100% of COBRA continuation coverage premiums from April 1, 2021 until September 30, 2021 for people who have lost their group health insurance as a result of lay-offs or a reduction in hours. While ARPA extends subsidies, the subsidy period will not expand individual COBRA coverage periods.

Affordable Care Act Coverage Subsidies

The Affordable Cara Act (ACA) allows qualified individuals to claim premium tax credits for health insurance plan covered through the ACA health insurance marketplace. Under ARPA, temporary changes have been made for 2021 and 2021 which allow wider access to these subsidies.

• Reduces contribution caps that the insured contributes to their plan
• Provides maximum ACA subsidies for individuals receiving unemployment benefits in 2021 who cannot qualify for other health care coverage
• Removes requirement for people to pay back excess tax credits for TY2020

Provisions for Medicaid

States that did not expand Medicaid under the Affordable Care Act have another opportunity to do so and receive a 5% increase to their Federal Medical Assistance Percentage (FMAP) if they expand Medicaid coverage for adults residing in their state.

In addition to this expansion, ARPA also:

• Enables states to provide full Medicaid benefits to eligible pregnant women for 12 months following the birth
• Increases federal matching funds for home- and community-based services
• Increases federal support for indigenous health providers (Indian Health and Native Hawaiian)
• Medicaid and the Children's Health Insurance Program (CHIP) beneficiaries receive full coverage for COVID-19 vaccines and treatment for 12 months after the pandemic ends
• COVID-19 vaccines and treatment will be covered for uninsured Americans, and outpatient prescriptions used to treat COVID-19 will be included in the Medicaid Drug Rebate Program

Employee Retention Tax Credit Expansion and Extension

The stimulus bill passed on December 27, 2020 included expansions for employee retention tax credits that are available to employers whose gross income declined. Before that bill was introduced, the Coronavirus Aid Relief and Economic Security (CARES) Act barred employers from claiming the employee retention tax credit if they had received a PPP loan. ARPA removed that criteria.

This permits employers to receive a PPP loan and the employee retention tax credit retroactive to March 12, 2020. Employers may not claim this credit if wages were paid with PPP loan funding that has already been forgiven. The employee retention tax credit has also been extended through December 31, 2021.

The Employee Retention Credit has been extended to include startup companies established by February 15, 2020 and that gross under $1 million. It also extends the credit to employers who are in dire circumstances whose gross receipts are less than 10% of what they were in 2019 during the same time frame. 

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