Archived Insight | January 20, 2021
President Biden has released a summary of his American Rescue Plan, an emergency legislative package to address the COVID-19 pandemic and the economic devastation it has created. The full plan may not be acted on by Congress for several weeks, so the administration is also expected to introduce other short-term measures in the interim.
In addition, Ron Klain, President Biden’s chief of staff, announced the administration’s intention to issue several Executive Orders during the first 10 days in office. The topics are wide-ranging and address both revisions of the previous administration’s Executive Orders and new rules designed to address the current crisis.
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The plan has several important provisions related to employment, public health and benefits, including:
The American Rescue Plan, a summary of which was released on January 14, 2021, could take effect in several ways.
The new Democratic leadership in Congress intends to use the regular legislative process, negotiate with Republicans and pass a package with a 60-vote majority in the Senate.
However, if that course of action is unsuccessful, other options could include changing the filibuster rule or passing financial-related portions of the package through budget reconciliation.
The plan would invest $20 billion in a national vaccination program in partnership with state, local and tribal governments.
It would also earmark $50 billion for a massive expansion of testing for COVID-19.
The minimum wage would be increased to $15 per hour.
Additionally, employers would be required to provide back hazard pay for frontline essential workers.
The CARES Act emergency leave programs expired at the end of December 2020. The American Rescue Plan would extend these programs through September 2021. Moreover, requirements to offer emergency leave would be expanded to all employers (not just those with under 500 employees) and would include federal workers.
Employees would be entitled to 14 weeks of paid sick leave and emergency family and medical leave with a maximum paid leave benefit of $1,400 per week. Employers would be entitled to a refundable tax credit and state and local governments would be reimbursed for the cost of the leave.
This support would include expanding child care tax credits for one year. The refundable tax credit would be available for child care for children under 13 up to $4,000 for one child or $8,000 for two or more children. It would be available in full to families earning less than $125,000 per year.
The extension of unemployment compensation benefits would apply to workers in the gig economy.
The American Rescue Plan would subsidize COBRA coverage through the end of September 2021. The amount of the subsidy is not mentioned in the summary of the plan.
In addition, the plan would increase the value of the ACA’s Premium Assistance Tax Credit for low-income individuals who purchase coverage on the federal Marketplace or a state Exchange.
The American Rescue Plan would provide significant funding to help K-12 schools and higher education institutions reopen safely.
These actions are expected:
The administration has also announced a list of agency actions that will be reviewed in light of the President’s Executive Order concerning “protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis.” The DOL will be reviewing “Financial Factors in Selecting Plan Investments,” the recently finalized guidance on environmental, social and governance investments.
As details about the American Rescue Plan and Executive Branch actions are released, we’ll let you know.
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This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.
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