HR Considerations Under the American Rescue Plan

By: Jeffrey Agranoff, Chief Human Resources Officer, HR Consulting Principal, NYC Market Leader, Grassi Advisors & Accountants

The American Rescue Plan Act, the new stimulus package passed last week, includes several provisions that employers need to be aware of and address within their Human Resources procedures.

The most significant is a 100% COBRA subsidy that employers must provide to assistance eligible individuals (AEIs), which are generally employees who experience involuntary termination or a reduction in hours that disqualifies them from the employee benefit plan.

Employers must pay the entire COBRA premiums for AEIs during a six-month period, beginning on April 1, 2021 and ending on September 30, 2021. This benefit must also be made available to AEIs who previously declined or dropped COBRA but whose coverage would have extended into the six-month window. 

Click here to read about required notices and more analysis from Grassi's HR Consulting professionals.

Employer Tax Credits

The Act allows for a refundable payroll tax credit for employers to cover the cost of the COBRA subsidies. The maximum credit is limited to the amount of Medicare payroll taxes paid in a quarter. 

Under the language of the Act, these credits will be reduced by credits received by the employer through the paid sick and family leave credit and the employee retention credit. Grassi’s tax advisors will keep you informed as new guidance is released on this topic.

The Act also extends the paid sick and family leave credits under the Families First Coronavirus Response Act (FFCRA) through September 30, 2021 (formerly March 31, 2021) for employers who choose to provide optional FFCRA paid leave benefits. The maximum tax credit for family leave wages was also increased from $200 per day and $10,000 per employee to $12,000 per employee. 

Grassi is Here to Help

Grassi has a full team of HR Consulting professionals who can help you navigate these changes. Please contact your Grassi advisor or Jeff Agranoff, HR Consulting Principal, to receive the guidance and support you need.

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