American Rescue Plan Act: Questions & Answers
Senior Compliance Attorney
The American Rescue Plan Act (ARPA) has raised many important questions for employers.
The following was taken directly from the Q&A session of “American Rescue Plan Act: COBRA, FFCRA & Other Benefit Provisions” webinar, which took place on March 31, 2021.
Please be advised that the information contained herein is subject to change.
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COBRA SUBSIDIES
Q: Are the COBRA subsidies applicable to dependents aging off of plans?
A: No. The ARPA COBRA subsidies only apply to COBRA qualified beneficiaries as a result of involuntary termination or reduction in hours.
Q: Do the COBRA subsidies apply to public sector employers?
A: Yes.
Q: Should we wait to send notices to former employees who would be AEI’s under the COBRA subsidy until the final DOL notices are out?
A: Yes. Although current notices can be altered to reflect the new requirements, it is a good idea to use the DOL model notices.
Q: Can employers still charge the employee contribution portion for subsidized COBRA?
A: No. ARPA COBRA subsidies cover 100% of the COBRA premium.
Q: Are you required to issue the Subsidy Expiration notice to everyone (all AIEs) or only folks who elected the COBRA subsidy?
A: The subsidy expiration notice is required only for those COBRA qualified beneficiaries that are receiving the COBRA subsidies.
Q: Does the COBRA subsidy follow the same provisions of the FFCRA for employers under 500 or does this apply to every employer no matter the quantity of employees. We are a public employer with greater than 500 employees.
A: The COBRA subsidies are applicable to all employers that are required to provide COBRA or state continuation coverage.
Q: For the COBRA subsidies, when we offer the AEIs the coverage, can they elect to enroll in the coverage effective April 1st? Or do we back date the coverage to their term date? Do they have a choice? What if they want to back date, do they pay out of pocket through April 1st?
A: AEIs that had a COBRA Qualifying Event prior to April 1, 2021 can elect to begin coverage on April 1, 2021 or begin coverage prospectively from the date of election. It does not appear that an AEI can go back to the original COBRA qualifying event and pay for the coverage up to April 1, 2021.
Q: If an employee takes a new job who was involuntarily terminated, would the prior employer have to offer a COBRA subsidy or their current employer?
A: If the employee was previously covered under the prior employer and the prior employer was required to offer COBRA, the prior employer would need to offer the subsidy. However, if the former employee has coverage with the new employer, the subsidy would not be available to that former employee.
Q: Does the COBRA subsidy and extension apply to employers with more than 500 employees?
A: Yes.
Q: Does the COBRA subsidy apply to Dental and/or vision coverage that are separate plans from the medical coverage.
A: Yes. Subsidies are available for medical, dental and vision coverage plans subject to COBRA or state continuation.
Q: I have an employee who would be an AEI and was terminated at the end of March. COBRA would be eligible for April 1st. How would you suggest I proceed with this instance?
A: Employers should offer COBRA as required and should note that the subsidies are available April 1 – September 30, 2021. If the employee elects COBRA, the employer will be required to pay for the COBRA and apply for the tax credits. Model Notices are now available (4/7/21).
Q: Would a reduction in hours due to disability after FMLA expiration be included in COBRA subsidy?
A: The DOL FAQs indicate that the subsidy is available for a reduction in hours that would include reduced hours due to a change in business operations, a change from FT to PT status, taking of a temporary leave of absence or participation in a lawful labor strike – so long as the employee remains employed.
Q: ARPA subsidy eligibility question: is it any reduction in hours (voluntarily reducing hours because they don’t want to work full time) as well as involuntary?
A: See above. It does not appear that the reduction in hours needs to be involuntary.
Q: What if an employee is termed due to gross misconduct and provides coverage for a minor child?
A: Employers are not required to offer COBRA to an employee if the employee is terminated for gross misconduct. If the employer is not required to offer COBRA, there would be no subsidies available to the employee. However, employers are strongly encouraged to consult with their own counsel if they plan to deny COBRA for gross misconduct.
Q: How would we as an employer know if our former employee became eligible for other health plan coverage?
A: The employer may require an attestation of the former employee. M3 will have a sample form available.
Q: What about the 2% admin fee for COBRA?
A: The DOL FAQs indicate that AEIs are not required to pay the 2% administrative fee.
Q: Does the COBRA subsidy cover voluntary dental insurance?
A: If the voluntary dental insurance plan is subject to COBRA the subsidy would apply.
Q: If someone was terminated in Feb 2021, normally would be eligible for COBRA Mar 1, 2021. Did not elect coverage for Mar 1; are you saying now they can elect the coverage effective 4/1/2021 and get the subsidy? So, there would be no coverage in March of 2021. So, you are thinking that the carrier will accommodate this with the lapse in coverage?
A: The AEI would be able to elect COBRA with premium assistance as of April 1, 2021 or at a later date if within 60 days of receiving notice.
Q: Would someone who voluntarily requested a reduction in hours be considered an AEI? Or just someone who had an involuntary reduction in hours?
A: The DOL FAQs indicate that the subsidy is available for a reduction in hours that would include reduced hours due to a change in business operations, a change from FT to PT status, taking of a temporary leave of absence or participation in a lawful labor strike – so long as the employee remains employed.
Q: If someone is an AIE does that also include the dependents that were on their plan at the time of termination?
A: Any COBRA qualified beneficiary would be eligible for the subsidy as long as the COBRA qualifying event was an involuntary termination or reduction in hours.
Q: If we have an employee who was under insurance due to the amount of hours under ACA and now no longer qualifies for insurance under ACA, would they be a qualifier for cobra subsidies?
A: No.
Q: Will there be any credits for schools?
A: Yes.
Q: What would happen if your Medicare Payroll Taxes doesn’t cover the credit amount?
A: At this time, it appears the IRS would provide a credit.
Q: If employee terminated but did not have insurance through our company are they qualified?
A: No.
FFCRA: EPSLA, FMLA & EFMLEA
Q: Can employers choose to extend FFCRA EPSLA through 9.30.2021 but NOT extend FFCRA EFMLEA? In other words – choose one, but not the other.
A: We believe that employers can choose to offer one form of leave but not the other.
Q: EPSLA/EFMLEA Is voluntary at this point and after April1 correct?
A: Yes
Q: A new 10 day allotment, not a 10 day allotment in addition to whatever is left over as of 3/31/21? Referring to EPSLA
A: The 10 day allotment is limited by calendar year, without regard for the first quarter of 2021.
Q: Can you participate on some of the FFCRA paid leave reasons (ex: sick due to getting vaccine) and not all reasons?
A: No. If an employer chooses to provide EPSLA or EFMLEA or both, all reasons for leave must be available.
Q: Can we continue to provide paid time off after April 1 but NOT reset the balances?
A: It appears that the 10 day balance for EPSLA must be reset each calendar year. It is not clear what must be done with EFMLEA.
Q: If we are voluntarily providing EPSLA, can the employer choose which reasons would qualify, or is it an all or nothing?
A: You cannot pick and choose qualifying reasons for EPSLA.
Q: If an employer chooses to extend EPSLA through 9/30, can they require documentation of immunization and/or disability in order to pay?
A: Yes, within reason.
Q: If the employer decides to offer EPSLA as of April 1, 2021, employee would only receive 10 days total per calendar year and no rollover balance from prior FFCRA. Would this be correct?
A: Yes.
Q: Could an employee essentially get 2 weeks paid under the EPSLA and 12 weeks under EFMLEA?
A: Yes.
Q: What paperwork would an employer require for EFMLEA? Would this be the standard FMLA paperwork?
A: Employers could require a medical certification for the EFMLEA medical reasons. In addition, M3 has an updated request form that could be used.
Q: Wouldn’t 14 weeks exceed the max 12 FMLA?
A: It would be 12 weeks of EFMLEA and 2 weeks of EPSLA for a total of 14 weeks.
Q: Should an employer include in the FMLA policy, EFMLEA?
A: Employers are not required to include information about temporary EFMLEA in the FMLA policy, but should continue to provide the poster.
Q: Under EPSL, options 1 – 3 were covered 100% and options 4 – 6 were at 2/3 pay. Is that still under the voluntary extension, and if so, do the new expansions (i.e. receiving the vaccination) qualify for the 100% or 2/3 pay?
A: That is correct. The new reasons for a person’s own situation would qualify as full pay.
Q: Is there a size of employer that qualifies for tax credits if we provide paid EFMLEA?
A: The original limit of 500 or less employees still applies.
Q: Is there still a minimum length of service requirement like there was with the FFCRA and EFMLEA of 30 days?
A: Yes. An employee who has been employed for at least 30 calendar days by the employer is eligible for EFMLEA. All employees are eligible for Emergency Paid Sick Leave, regardless of how long they have worked for the employer.
Q: We’ve allowed EE’s to “carry over’ unused FFCRA benefits from 2020 to 2021 with a sunset date of 6/30/2021. Because this is voluntary is it OK that benefits aren’t extended until 9/30/2021?
A: An employer may allow employees to carryover unused FFCRA benefits from 2020 to 2021 through March 31, 2021. However, any FFCRA benefits provided after April 1, 2021 must follow the rules established by ARPA. For example, employees must be permitted to take time off to get a COVID vaccination or for any illness following a vaccination. New leave allotments must be provided.
Q: EFMLEA is still 2/3 of regular rate to a max of $200/day, correct? I see $200 referenced but don’t see the 2/3 referenced anymore.
A: Correct. An employee is entitled to an amount not less than 2/3 of the regular rate of pay. Paid leave shall not exceed $200 per day; $12,000 in the aggregate.
Q: Previously, the EPSLA and EFMLEA pay was not subject to the employee portion of FICA taxes (only employer portion). Has this changed with the extension?
A: Payments made to employees under FFCRA are wages. Employers are not required to pay the employer portion of social security tax on wages paid under FFCRA.
Q: For ESPLA it said the 10 days would restart on April 1 but does the 10 days reset? If someone already used their 10 days they would NOT receive another 10 days, correct?
A: Beginning April 1, 2021, employees are entitled to a ten days of ESPLA, regardless of how many they used in the past.
Q: Can we limit the hours of FFCRA time allowed for employees going to get their vaccinations? (i.e. allow 2 hours for pay to get shots)
A: Our understanding is that an employer may not limit the amount a time an employee may take to get a vaccination. Unless further guidance is released to the contrary, we recommend an employer permit an employee to take one day to get each vaccination.
Q: Will M3 be updating the FFCRA form that was created last spring?
A: Yes. M3’s FFCRA sample request form has been updated to reflect the changes made by ARPA. Please contact your account team to receive an updated copy.
Q: Have you seen any verbiage on how many hours to pay per day? For the FFCRA we had to look at their average hours for the previous 6 months.
A: The same guidance would apply to the extensions.
Q: Is the EPSLA and EFMLEA tax credit just for employers with less than 500 employees (public sector question still to be answered).
A: Yes.
DCAP & FSA CHANGES
Q: ARPA temporarily increased the maximum Dependent Care FSA (DCFSA) benefit that can be excluded from income for the 2021 taxable year. The maximum amount increased from $5,000 to $10,500 or, for married taxpayers filing separately, the maximum increased from $2,500 to $5,250. This temporary increase is optional and requires a Plan amendment. Can you explain in a little more detail if a self-funded client should be doing this?
A: A DCAP is a separate account used for dependent care expenses. These rules are not impacted by whether your health plan is fully-insured or self-funded.
Q: For the dependent care assistance program – is it voluntary to notify employees of the new amount & offer the increase in Dependent Care election?
A: Yes.
Q: Our plan year ends 6/30/2021. We experience a large number of terms and retirements in June. Is it correct that our employees who term or retire cannot access their FSA dollars for expenses incurred after 6/30/2021? They have no extension period?
A: If an employee has a positive FSA balance at the time of termination, the employer must offer COBRA as it relates to the FSA. If COBRA is elected for the FSA, the former employee continues to contribute to the FSA after termination and the unused balance remains accessible through the end of the plan year. In response to COVID, employers MAY choose to allow former employees to access unused FSA funds, but the employer must amend its FSA plan document.
Q: Can flex spending expenses be reimbursed that are incurred after a term date now?
A: See above.
