President Donald Trump signed the Consolidated Appropriations Act into law on December 27, 2020. The law contains over 5,500 pages detailing the relief package and other provisions. The key elements of the Consolidated Appropriations Act are the following:
Paid Sick Leave and Expanded FMLA Tax Credits Extended
Beginning on January 1, 2021, FFCRA payroll tax credits for paid sick and family medical leave are voluntarily extended through March 31, 2021. Employers now have the option to grant or deny Emergency Paid Sick Leave and/or Expanded Family Medical Leave. Any paid time granted through March 31, 2021 will be eligible for payroll tax credits. The tax credit is limited to two weeks of paid sick leave and ten weeks of Expanded Family and Medical Leave for a qualified employee; this includes time taken in 2020 (no additional time was granted for 2021).
More than $284 billion in additional funds are available for first and second forgivable loans through the Paycheck Protection Program (“PPP”). The revised criteria for a new PPP loan are:
- Not more than 300 employees;
- Has used or will use the full amount of first PPP loan;
- Had gross receipts during the first, second, third, or fourth quarter in 2020 that demonstrate a reduction of 25% or more from the gross receipts of the business during the same quarter in 2019.
Additional eligible expenses qualifying for PPP Forgiveness are extended to include most, but not all, operational expenses, property damage, supplier costs, and purchases of Personal Protective Equipment (PPE).
Borrowers may select to use any period from 8 weeks to 24 weeks as their “covered PPP Loan period.”
A new simplified Loan Forgiveness form (Form 3805-S) is now available for borrowers whose loan was under $150,000.
First or second draw PPP Loans may now be applied for and approved through March 31, 2021.
Advances received for the Emergency Income Disaster Loan (EIDL) are deemed non-taxable income. Borrowers who have already received PPP loan forgiveness with a reduction for the EIDL Advance may now amend their application to request repayment of the advance.
The EIDL Program has been granted an additional $20 billion in funding, with a directive to distribute money to low-income areas first, based on ZIP code.
Flexible Spending Account (“FSA”) Plans
Health and Dependent Care FSA Plans may now permit unused benefits from the 2020 plan year to be carried over to the next tax year, through the 2021 plan year. Two options are available:
- Grace periods (normally 2 ½ months) can be extended until the end of the following year for 2020 and 2021 plan years, or
- Health FSA rollover limits can be increased from the current $500 maximum limit to an unlimited amount for 2021 and 2022.
Employers can extend the maximum age of eligible dependents from under age 13 to under age 14.
Employers can choose to allow mid-year election changes in 2021 without a qualifying event. However, there can be no refunds of previously contributed / deducted monies, only increases or decreases to elections going forward.
Also, employees or former employees no longer participating in the plan during 2020 or 2021 can be allowed to use any unused amounts through the end of the following year.
All of these plan changes are at the option of the employer and would require a plan amendment.
Employee Retention Tax Credit (“ERTC”)
ERTC can now be applied for retroactively by PPP recipients through an amendment to Sec. 206 of the CAA. (This was not previously available.)
For employers with fewer than 100 employees, retroactive ERTC is available if:
- A business was fully or partially shut down by a government order or had a drop in gross receipts of more than 20%, down from the same quarter in 2019.
- For employers with 100+ employees, retro ERTC is only available if employees were paid even though the business was shut down (employees were “paid not to work”).
For 2020, wages are limited to $10,000 per employee (maximum credit of $5,000 per employee) and cannot exceed the amount an employee would have been paid for working the equivalent duration during the 30 days immediately preceding such period.
For the period January 1 to June 30, 2021, wages remain limited to $10,000 per employee (maximum credit of $7,000 per employee) and can exceed the amount such employee would have been paid previously.
Payroll Tax Credits
Payroll tax deferrals which were slated to end December 31, 2020, may now be deferred until December 31, 2021, with no penalties or interest accruing until January 1, 2022.
Provider Relief Fund
$3 billion has been allocated to the HHS Provider Relief Fund to assist medical facilities who have lost revenue due to COVID-19 or who have been directly involved in COVID-19 response activity.
Unemployment Supplemental Payments
Pandemic Unemployment Assistance payments of an additional $300/week are authorized through March 14, 2021.
Elimination of Surprise Medical Billing
Beginning in 2022, insured persons may not be billed for the cost difference between in-network and out-of-network services when the individual had no control over selection of provider.
- Care at an in-network facility but unknowingly treated by out-of-network provider;
- Emergency and urgent care services where provider is not chosen;
- Transport by air ambulance (but not ground ambulance).
Increased transparency requirements have also been mandated:
- Advanced Explanation of Benefits, a good-faith estimate of costs and cost sharing, will be required before a health care service is delivered, including whether a provider furnishing services is In-Network or Out-of-Network
- Insurers will also have to offer price comparison information by phone, develop a web price comparison tool, and maintain up-to-date provider directories.
Employer-Sponsored Retirement Plan Vesting Reprieve
While the IRS code generally requires retirement plans to provide for 100 percent vesting upon termination or partial termination of a plan, a reprieve will be granted to plans that had a partial termination in a plan year between March 13, 2020 and March 31, 2021 if the number of active participants in the plan covered on March 31, 2021 is at least 80 percent of the number on March 13, 2020.
Student Loan Repayment and Tuition Assistance Extended through 2025
Employers may provide up to $5,250 in tax-exempt student loan repayment contributions or tuition assistance through December 31, 2025, extended from the previous deadline of December 31, 2020.
100% of business meals in 2021 and 2022 may be written off, provided the food and beverage is from a restaurant or bar and was paid before January 1, 2023.
Taxpayers may claim $300 / $600 married filing jointly in above-the-line charitable deductions for cash payments to established charities in 2021.
As with previous COVID-19 legislation, we can anticipate updates from the U.S. Department of Labor and the U.S. Department of Treasury providing clarification and guidance. Updates will be provided as they become available.
If you need assistance or guidance to help with implementing any of the Consolidated Appropriations Act requirements, please contact HR Service Inc. at (801) 685-8400. We’d be happy to help!
For those who missed our training on the Consolidated Appropriations Act for 2021, you can watch a recording of the training here: https://attendee.gotowebinar.com/recording/8089309768432596239
Prepared by David Norton, SPHR, SHRM-SCP & Rhonda Hollier, SPHR, SHRM-SCP
Human Resources Business Partners