President Trump Signed COVID-19 Relief Package
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On Dec. 27, 2020, President Trump signed the Consolidated Appropriations Act of 2021 into law. The Act provides temporary special rules for health and dependent care flexible spending accounts (FSAs) that give employees additional time to use these funds.
Because of the COVID-19 pandemic, employees may be more likely to have unused amounts in health or dependent care FSAs. For plan years ending in 2020 and 2021, the Act allows employers to:
- Permit employees to carry over unused amounts remaining in these FSAs to the next plan year.
- Extend the grace period to 12 months after the end of such plan year.
- Permit employees who cease plan participation during 2020 or 2021 to continue to receive reimbursements from unused amounts through the end of the plan year in which their participation ended.
The Act also allows employees to elect to prospectively modify the amount of their FSA contributions for plan years ending in 2021, even if they have not experienced a change in status. However, the applicable dollar limitations will continue to apply. Employers can retroactively adopt plan amendments incorporating these provisions, if specific requirements are met.
Stimulus Bill Extending FFCRA Tax Credits but Not Leave Mandate Signed Into Law. Employer Credits Available for Leave Offered Through March 2021
An appropriations bill, signed into law by President Donald Trump, does not extend the paid sick leave and expanded family and medical leave mandates created by the Families First Coronavirus Response Act (FFCRA). These leave requirements expire on Dec. 31, 2020.
However, the bill does extend the time limit for employer tax credits for FFCRA employee leave. As a result, tax credits will be available to fund FFCRA leave offered by employers through March 31, 2021.
The FFCRA’s leave mandates require businesses with fewer than 500 employees to provide employees up to 80 hours of paid sick leave for their own health needs or to care for others. The act also requires an additional 10 weeks of paid family leave to care for a child whose school or place of care was closed, or child care provider was closed or unavailable due to COVID-19.
The FFCRA employer tax credits cover certain costs of the employee leave required by the law; specifically: employee wages, health plan expenses allocable to those wages, and the employer’s portion of the Medicare tax related to the wages.
We hope this information was very helpful to you. Our goal is to provide you with useful information to assist you with labor requirements and compliance. Contact us today to further assist you. We wish you the best success!
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