PPB May 2021

• Extends the voluntary EPFL and offsetting federal tax credits through September 30, 2021. • Modifies EPFL family leave to provide pay (up to $200/day) for the first two weeks, which was previously unpaid. The new EPFL provides 12 weeks of paid family leave (instead of the previous 10 weeks), thereby increasing the maximum benefit from $10,000 to $12,000 per individual. • Expanded the reasons that leave can be provided as EPFL to include all of the reasons that EPSL can be used, including if an employee is subject to a quarantine or isolation order, if the person was told to self-quarantine by a health-care provider due to COVID-19, is experiencing symptoms of COVID-19 and is seeking a medical diagnosis, is caring for an individual who is subject to a quarantine or isolation order or has been advised to self-quarantine, and where an employee’s son or daughter’s school or place of childcare is closed due to COVID-19. In addition, ARPA adds new categories for eligible reasons for EPFL time to include time absent from work due to: º the employee is seeking or waiting for results for a COVID-19 test or diagnosis, º the employee is recovering from an illness, º the employee getting a COVID-19 vaccination, and º the employee recovering from side effects of receiving the COVID-19 vaccination. ARPA also requires employers to be consistent when offering either EPSL or EPFL paid time off; if the paid leave is offered to one employee or group, it should be offered to all employees. Any employer that favors certain employees such as full- time or highly-compensated employees may jeopardize their chance to get offsetting tax credits. Note: Favoring certain groups may also open exposure to discrimination charges if the uncovered groups are in groups protected by federal, state or local law. Cobra Subsidies The ARPA mandates that, from April 1 to September 30, 2021, covered employers (those with 20 or more employees who offer medical coverage and are subject to COBRA) must provide a 100-percent COBRA subsidy to any employee who loses employer- covered health-care coverage due to an involuntarily termination or involuntary reduction in hours. Employers must also offer a new COBRA enrollment period beginning April 1, 2021 for employees who previously declined or dropped COBRA coverage and are still within their maximum COBRA coverage period. Details include: • Employers with 20 or more employees and subject to COBRA are covered and must provide notification to covered employees and former employees. • Covered employers must provide 100-percent subsidy of premiums for employees and their COBRA-eligible dependents and spouses who are involuntarily terminated or have their work hours involuntarily reduced. • Covered employers must also offer COBRA and provide the corresponding 100-percent subsidy to former employees who either previously declined or dropped coverage. • Employers are not required to (but may) offer this subsidy to employees or spouses/dependents of employees who: º voluntarily resign, º are terminated for gross misconduct (Note: employers denying COBRA coverage should consult their legal counsel first to ensure compliance), and º whose maximum COBRA coverage period expired on or before April 1, 2021 • The COBRA subsidy includes employer- sponsored group health plans including medical, dental, vision, health reimbursement accounts (HRAs), as well as other covered plans such as some employee assistance programs (EAPs), wellness programs and on-site medical clinics. • The qualifying 100-percent subsidy must be provided April 1 through September 30, 2021 or until the employee’s maximum COBRA coverage period expires. • Employers will be reimbursed for payment of COBRA subsidies through quarterly tax credits against the employer’s Medicare hospital insurance taxes. • Subsidies are excludable from the employee’s gross wages and will preclude those individuals from claiming an advance premium tax credit under the Affordable Care Act (ACA). Employee Retention Credit ARPA extended and modified the Employee Retention Credit (ERC) established in the Coronavirus Aid, Relief and Economic Security Act (CARES Act), passed in March 2020. The ARPA entails the following: • Extends the covered period from June 30 to December 31, 2021. • Allows employers who have experienced a significant decline in gross receipts to claim a payroll tax credit up to 70 percent of qualified wages up to $10,000 per employee per calendar quarter. • Changes the method of refund for the last two calendar quarters of 2021. º Under CARES, the ERC was credited against employers’ share of Social Security tax (6.2 percent of wages). Going forward, the ERC will be credited against the employer’s share of Medicare tax (or 1.45 percent of wages). º Any additional credit may be applied as an advance payment. • Maintains that employers with more than 500 employees can claim for qualifying wages (including certain health plan expenses) paid to | MAY 2021 | 81 THINK