The American Rescue Plan Act
NOTE: Most provisions of ARPA have now expired, but there are some important exceptions. Rental assistance remains available until the appropriated funds run out, and additional Affordable Care Act subsidies remain available through the end of 2022. Additionally, most states and local governments that were granted aid in this bill have yet to spend the money. Public sector workers should be sure to reference this in negotiations because employers have until the end of 2024 to allocate the money, and until the end of 2026 to spend it.
The American Rescue Plan Act (ARPA), a $1.9 trillion economic stimulus and COVID relief package, was signed into law by President Biden on March 11, 2021. Not a single Republican in either house of Congress voted for the bill. The bill contains many provisions which will directly help working people.
Compared to the CARES Act passed last summer, this bill is more narrowly focused on providing direct aid to individuals and the public sector, with comparably little in the way of corporate handouts. An independent estimate by the Tax Policy Center suggests after-tax income for the lowest-earning 20 percent of Americans will rise by 20 percent, with income for the next-lowest 20 percent rising by almost 9 percent. Other estimates suggest it will cut total poverty by one third, and child poverty in half. It is also projected to be a huge shot in the arm for the U.S. economy, and could result in a larger economic pie by the end of 2021 than there would have been if COVID-19 had not interrupted the economic growth pattern of the previous several years.
Here are some of the highlights of the ARPA that are most relevant to workers:
Further extension of unemployment
The three special pandemic unemployment programs created under the CARES Act, along with the current $300 per week supplement, have been extended through Labor Day (September 6). The plan also increases the total number of weeks one can collect unemployment from 50 to 79. In addition, the Act provides that the first $10,200 in unemployment benefits will be untaxed (retroactive to 2020) for all households who make less than $150,000. This is a welcome change to tax policy which will stop working-class individuals who collected higher unemployment than their normal wages in 2020 from receiving an unexpected jump to a higher tax bracket.
Third round of direct payments to individuals
Individuals making under $75,000 per year, and families making under $150,000 per year, will receive checks once again directly from the government — this time $1,400 per individual. Due to demands from “moderate” Democrats, higher-income earners who received some money from the earlier two rounds of checks will receive much less or no money at all in this third round. However, ARPA fixes a flaw in the earlier rounds, with adult dependents and 17-year-old children in a household now counting toward the $1,400 per person benefit. Once again, undocumented families are excluded, although couples of mixed immigration status should receive checks for whichever adult is documented (and children, if they have any).
Employer tax credit for emergency paid sick and family leave
Congress was unable to formally extend the CARES Act emergency paid sick and family leave provisions, as they are regulatory matters and thus generally considered to not be passable under budgetary reconciliation procedures. However, ARPA does extend the underlying tax credits which paid for emergency sick and family leave through September 30. Unlike the extension that passed last December, ARPA has a “reset” of hours for paid sick leave on March 31, allowing workers who previously used their entire allotment of paid leave to take a further 80 hours of paid sick leave. In addition, emergency sick leave can now be taken in order to attend a vaccination or deal with vaccination complications.
While offering paid sick and family leave is entirely voluntary on the part of employers, given that the cost (for private employers with less than 500 workers) remains 100 percent reimbursable, there is every reason to push employers to continue these policies through the end of September. In order to ensure that members in qualifying shops continue to be able to use emergency paid leave through September, UE locals should be in touch with their assigned staff representative to assist with negotiating new memoranda of understanding which establish a continuation of emergency sick/family leave policies.
Significant aid to state and local governments, education
One of the largest elements of ARPA is a $350 billion fund available to state, local, territorial, and tribal governments, distributed in a formula which gives more money to areas with higher unemployment. Many governments have already announced that all planned layoffs for the current fiscal year have been suspended, in expectation of the incoming aid. In addition, $130 billion has been allocated for K-12 schools in order to safely reopen within 100 days, and $40 billion has been allocated to colleges and universities.
One of the four allowable usages of this money is to provide direct premium pay to eligible state/local workers, or to provide grants which allow for other employers to provide premium pay for eligible workers. UE locals representing public-sector workers and other essential workers should be in touch with their assigned staff representative about demanding and/or negotiating hazard pay provisions.
Premium-free COBRA coverage for six months
Workers who have been laid off or fired from their jobs and had employer-provided health insurance will be able to get coverage through COBRA without paying any premiums. This benefit begins on April 1 and runs through September 30 and will be available even if the worker previously turned down COBRA coverage. Unlike regular COBRA coverage, workers will only be eligible for premium-free coverage until such time as they become eligible for other group health insurance. New enrollees who do not have access to other group insurance should be able to stay enrolled for the full six months. However, some people who were already eligible for COBRA over a year ago will have COBRA eligibility expire before the period of paid COBRA comes to an end.
Other healthcare changes
ARPA contains significant new Affordable Care Act subsidies which help make individual health insurance more affordable for those who do not have access to group coverage. Workers will be able to receive enough subsidies to lower premiums to no more than 8.5 percent of their household income, which will result in lower healthcare premiums for all but the wealthy. Subsidies are increased for all groups of workers making 400 percent of the federal poverty level (FPL) or less, with those under 150 percent of the FPL — and anyone who collects unemployment at any point during 2021 — eligible for premium-free silver coverage. The increased and expanded subsidies are active through both calendar years 2021 and 2022, but use of unemployment to qualify for no-premium silver plans will only be in effect for 2021.
Many small changes have also been made to Medicaid under ARPA, including requiring coverage of COVID-19 vaccines and treatment, and expanding a prior Medicaid option for states to cover COVID-19 testing for those who are uninsured. However, the single largest change is a set of new incentives to get the 12 states who have not expanded Medicaid to agree to do so.
Other benefits for working people
ARPA makes significant changes to the child tax credit for 2021, increasing it to $3,000 per child (and $3,600 for children under age six) for all heads of households making less than $112,000 and couples filing jointly making less than $150,000. The IRS is also instructed to estimate each taxpayer's annual benefit and send one-twelfth of the amount ($250 per child, or $300 for those under six) to taxpayers on a monthly basis beginning in June and ending in December. For the current year only, the Earned Income Tax Credit is also significantly improved in several ways, most notably by substantially increasing the benefit to childless workers. Households making use of the food stamp program will continue to see a 15 percent increase in their benefits through September 30.
The bill also includes many programs to help alleviate the housing crisis that working-class Americans have faced through the pandemic. The largest single program is a further $21.6 billion in rental assistance. This money will be granted to state and local governments, which will in turn provide grants to eligible households for rental assistance and utility fees. The Act also contains $10 billion in grants available to homeowners.
Finally, ARPA includes a program to rescue over 100 chronically underfunded multiemployer pension plans, which will save the retirement security of 1 to 1.5 million union workers and retirees, and will also help ensure that the Pension Benefit Guaranty Corporation (PBGC) — a government-run entity which insures private pension plans — does not become insolvent by 2026.