What the American Rescue Plan means for businesses, individuals unemployed due to COVID-19 pandemic

October 10, 2023

The newly approved $1.9 trillion American Rescue Plan includes provisions that affect businesses and those who are out of work due to the COVID-19 pandemic.Here's what you should know.The spending package continues employer payroll tax credits for organizations that have provided COVID-19-related time off. Employers who provide emergency paid sick leave under the Families First Coronavirus Response Act (FFCRA) also can choose to provide an additional 10 days of leave between April 1 and September 30.An unemployment insurance supplement of $300 per week is extended through September 6 with the passage of the American Rescue Plan. Note, the first $10,200 in unemployment benefits a person received in 2020 is non-taxable for household incomes under $150,000. An earlier House version of the bill proposed extending jobless programs through the end of August and providing an extra $400 per week in benefits.A provision that would have increased the federal minimum wage to $15 per hour was included in earlier versions of the bill but was omitted in the final version President Joe Biden signed on March 11.Meanwhile, the IRS already has begun issuing $1,400 individual payments for people who make less than $75,000 a year or less than $150,000 for those who file a joint tax return. Direct payments of $1,400 per dependent (including adult dependents) also are being paid in addition to the individual payments.Employer tax credit provisionsEmployment law firm FisherBroyles LLP shared the following highlights of other business-related provisions in the bill including:

  • Extending employer payroll tax credits for providing employees eFMLA sick leave under FFCRA through September 30. Employers are no longer required to provide that type of paid time off but many are continuing to do so voluntarily.
  • Expanding eFMLA tax credit eligibility to also include time off taken to receive a COVID-19 vaccine or recover from any injury, disability, illness or condition related to the vaccine.
  • Increasing the limit on the tax credit to $12,000 for paid family leave wages. Currently, eFMLA tax credits are limited to $200 per day and $10,000 per employee.
  • Prohibiting employers from claiming paid leave payroll tax credits if it discriminates in favor of highly compensated employees, full-time employees or on the basis of employment seniority.
  • Making state and local governments, 501(c)(1) nonprofit organizations and other federal government entities eligible to receive eFMLA tax credits.

Small business aidThe National Association of Professional Employer Organizations (NAPEO) notes this relief package expands eligibility guidelines through the Paycheck Protection Program to create more opportunities for nonprofit organizations to receive assistance.The Small Business Administration also is setting aside a direct subsidy of $28.6 billion for restaurants, with $5 billion of that earmarked specifically for restaurants with gross revenue of less than $500,000.Health insurance provisionsThe American Rescue Plan includes premium tax credits to help assistance-eligible individuals continue their group health benefit offerings through the Consolidated Omnibus Budget Reconciliation Act (COBRA).This refundable credit applies to premiums and wages paid from April 1, 2021 through September 30, 2021, according to a Journal of Accountancy analysis. COBRA premium assistance cannot be counted as part of a person’s gross income. The American Rescue Plan also lowers the upper income limit for tax credit eligibility for individuals who obtain health insurance coverage through the Affordable Care Act and lessens the amount a person has to contribute to the cost of coverage.The U.S. Senate narrowly approved a revised version of the American Rescue Plan, which includes $91 billion to fund various COVID-19-related initiatives, on March 6. The U.S. House of Representatives voted 220 to 211 in favor of the bill four days later. The full version of the American Rescue Plan (H.R. 1319) is detailed online.This is the third stimulus package passed since March 2020.Syndeo can help you sort through all of the business implications of the American Rescue Plan and any other legislation that would affect you or your employees.About us: As the Heartland’s leading employer services company, Syndeo partners with local business owners to help them minimize risk, improve efficiency and maximize profitability allowing them the freedom to focus on growth and fulfilling their mission. Syndeo fulfills its mission by taking on all of the HR responsibilities for our clients’ workforce, including employee relations, benefits, risk management and payroll. Winner of the 2020 Best of HR Services Award through ClearlyRated for providing superior client service. See our ClearlyRated profile here.

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