ARPA Preliminary Guidance, Dependent Care and Other Highlights from the ARPA, New ARPA COBRA Subsidy
Updated news! Congress has passed and President Biden has signed the American Rescue Plan Act of 2021 (ARPA).
Three big changes for employers to note:
1) ARPA provides for 100% COBRA subsidies for April 1, 2021 through September 30, 2021 for enrollees and family members who lost coverage because of involuntary termination of employment or reduction of hours. Subsidies are not retroactive. This subsidy does apply to CalCOBRA as well as Federal COBRA. Subsides can end earlier if you exhaust COBRA, become eligible for new employer sponsored coverage, or qualify for Medicare. Federal COBRA reimbursement to employers will come through a reduction in Employer Payroll Taxes. It is unclear how CalCOBRA premiums will be reimbursed.
2) ARPA increases the Dependent Care FSA maximum to $10,500 (or $5,250 for married individuals filing separately). The maximum applies to the taxable year beginning after December 31, 2020, and before January 1, 2022. This election will require a modification of the plan document (this must be done before the end of the plan year) and a new employee open enrollment period for the Dependent Care FSA. (The contribution for health FSA remains unchanged at $2,750)
3) ARPA allowed employers to extend the Paid Sick and Family Leave provisions previously in force from April 1, 2021 to September 30, 2021. This is voluntary and done at the employer’s discretion.
What do you do now?
At this point we must play a little waiting game. The specific regulations for these changes are yet to be drafted. Currently, various COBRA and FSA administrators are awaiting that information and will update their clients. As these rules become clearer, we will be reaching out with updated information as well. In the meantime I have attached two of the better (and more detailed) summaries of these issues.
As always, if you have any questions or if we can help in any way, please reach out!
Call us at (805) 687 - 3225, or send us an email at info@petersmilam.com. We can't wait to hear from you!
-Dave Peters & Steve Milam
