ARPA's Impact on Stimulus Payments, Unemployment Benefits

Organize. Humanize. Maximize.
The American Rescue Plan
Act of 2021
Keys to Compliance
March 31st, 2021
Bob Greene

2
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Today’s Speaker
Bob Greene currently serves as Senior HR Industry Analyst at Ascentis.
Bob’s 43 years in the human capital management industry have been spent
in practitioner, consultant and vendor/partner roles. As practitioner, he
managed payroll for a 5,000-person bank in New Jersey. As consultant, he
spent 8 years advising customers in HRMS, and payroll and benefits system
design as well as acquisition strategies. Bob also built a strategic HCM
advisory practice for Xcelicor (later acquired by Deloitte Consulting.)
As vendor/partner, he has had prominent roles in sales support, marketing
and product management at several companies and currently Ascentis. Bob
has been a Contributing Editor for IHRIM's Workforce Solutions Review
journal, for the past eight years, and since 2020 has served as Co-Managing
Editor. His experience also includes two years as Adjunct Lecturer in HRIS
at Benedictine University in Lisle, Illinois. In addition to his 43 years of
experience, Bob also holds a BA in English from Rutgers University.
Bob Greene

Agenda
• Part I: General Provisions of Highest Interest to Your Employees
• Stimulus Payments
• Unemployment Compensation Enhancements, et. al.
• Other Individual Taxpayer Modifications
• Part II: Business Benefits Impacting HCM
• Paycheck Protection Program (PPP) “Round Two-and-a-Half!”
• Employee Retention Tax Credits (ERTC) Extended and Modified
• FFCRA Paid Leave Provisions - Extensions and Revisions
• Part III: Employee Benefits Impacting Provisions
• FIRE SALE on COBRA Premiums!
• ARPA Impact on ACA ESRP Penalty Exposure
• Part IV: Preview: Is OSHA About to “Drop the Hammer?”
• How Ascentis Can Help
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Disclaimer
• Legal advice
• A political opinion
• The “last word” on these topics!
This presentation is NOT:
Before Taking Any Actions
Before taking any actions on the information contained in
this or any other Ascentis presentation, employers should
review this material with their professional advisors.
This presentation is based on the latest published information available up to 24 hours
prior to its broadcast. This information is changing and being reinterpreted frequently.
Please check for updates before relying on this content.

Part I
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ARPA’21:
General Provisions

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Where’s All This Money Going?
Graphic courtesy of: https://taxfoundation.org/american-rescue-plan-covid-relief/

High Level Overview of ARPA’21
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The American Rescue Plan Act of 2021…
• Was signed into law on March 11, 2021 (just seven days shy of the one-year
anniversary of the CARES Act being signed) as H.R. 1319.
• Takes 628 pages to document, with:
• 11 “titles” (each can be thought of as a “law within a law”)
• 39 “subtitles”
• $1.9 trillion in additional federal spending relating to COVID relief
• Includes taxpayer-facing benefits such as direct stimulus payments and
significantly enhanced unemployment benefits.
• The divisions of highest interest to employers will be:
• Title IX, Subtitle F, Sec. 9501: COBRA Coverage Premium Abatement
• Title IX, Subtitle G: Promoting Economic Security (extends many previous provisions)

FFCRA
(H.R.6201)
CARES Act
(H.R. 748)
PPP & HCEA
(H.R. 266)
PPPFA
(H.R. 7010)
CAA’21
(H.R. 133)
ARPA’21
(H.R. 1319)
A Single Year of COVID Relief Legislation – A Historical Timeline
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ARPA’21 Spending Brings Cumulative COVID Relief to ~ $7.00 trillion*…
* Depending upon the extent of successful PPP loan forgiveness, includes legislative, administrative, and federal reserve actions

ARPA’21 General Provisions – Stimulus Payments
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The Terms of the Additional Stimulus Payments
• Supplemental stimulus payments of $1,400 per taxpayer (up from $600) and $1,400 per
dependent child (up from $600), applied against a refundable 2021 tax credit.
• By classifying the amount this way, the payments are available for release immediately.
• Direct deposits and some checks has already been made/mailed.
• If taxpayers are not eligible for payments now based on 2020/2019 income, they may still qualify for the credit on their 2021
tax filings made in 2022, if their 2021 income falls below the specified threshold levels.
• Amounts are prorated from the previous $1,200 level:
• Full $600 payments are available for individuals with AGIs of less than $75,000, proration ends at $80,000,
reduced from the previous $87,000 level associated with the first check.
• Federal/state debt/obligations NOT ELIGIBLE for offset against these payments:
• Outstanding IRS/income tax debt
• Outstanding/past due student loan payments
• State income tax obligations
• Unemployment compensation repayments
• Outstanding/past due child support orders (this is the same as the previous $600 payment’s terms)

ARPA’21 General Provisions – Stimulus Payments
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Stimulus Payments – How They’ve Evolved
First Payment Second Payment Third Payment
Maximum Amount
(Per Adult) $1,200 $600 $1,400
Flat Amount
(Per Dependent) $500 (16 and younger) $600 (16 and younger) $1,400 (any age)
Income to Receive Maximum
Amount (Single/HOH/Joint) $75,000 / $112,500 / $150,000 $75,000 / $112,500 / $150,000 $75,000 / $112,500 / $150,000
Taxpayer Upper Limit
(Single/HOH/Joint) $100,000 / $146,000 / $198,000 $87,000 / $124,500 / $174,000 $80,000 / $120,000 / $160,000
Citizenship
Citizens and non-citizens with a
social security number
Citizens and non-citizens with a
social security number
Expanded to include mixed-status
families if one member has SSN
Date Approved March 27, 2020 December 27, 2020 March 11, 2021
First Payments Sent/
Final Payments Sent April 13, 2020 / Feb 16, 2021 Dec 29, 2020 / Feb 16, 2021 March 13. 2021 / Dec 31, 2021
Number of Payments Made/
Total Dollars Distributed >160MM / $270 billion >147MM / $142 billion TBD / TBD
Permissible Offsets Back child support ONLY None permitted None permitted

General Provisions – CARES Act Original UI Enhancements
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The CARES Act Provided for … Enhanced Unemployment Compensation
• The CARES Act authorized several important enhancements to state-
administered unemployment compensation (“UC”) programs, including:
• Pandemic Unemployment Assistance (PUA): Extension of UC to the self-employed and
so-called “gig economy” workers
• Waiver of the first week waiting period for benefits payments
• Establishment of an additional “short-term compensation” program for employees who have
had their hours reduced to avoid outright layoff. This represents the first ever funding of a
form of unemployment benefits for workers still working, but on a reduced schedule, and
• Pandemic Emergency Unemployment Compensation (PEUC): An additional 13 weeks of
benefits (Expired December 31, 2020.)
• Pandemic Unemployment Compensation (PUC): An addition of up to $600 per week in
enhanced benefits for a period of up to four months. (Expired July 31, 2020.)
• All of the above UC expansions (except the first bullet) required states to opt-in with modified
state/federal agreements, and all did, although it took several weeks.

General Provisions – CAA’21 Revised UI Enhancements
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CAA’21 Renewed but Modified That Enhanced Unemployment Compensation
• CAA’21 spent $286 billion for enhancements to state-administered
unemployment compensation (“UC”) programs, including:
so-called “gig economy” workers.
• Waiver of the first week waiting period for benefits payments (at the state’s option).
• The PUA was extended through March 14, 2021.
• Pandemic Emergency Unemployment Compensation (PEUC): An additional 11 weeks of
benefits through March 14, 2021, for those who had exhausted their state-level benefits.
• Eligible workers with PUA/PEUC time left as of March 14, 2021 could apply for “transition
benefits” for 3 additional weeks, through April 5, 2021.
• Pandemic Unemployment Compensation (PUC): Added $300 per week in enhanced
benefits (down from $600 under the CARES Act) through March 14, 2021 only.

General Provisions – ARPA’21 Revised UI Enhancements
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ARPA’21 Also Renewed and Modified That Enhanced Unemployment Compensation
• ARPA’21 spent $289 billion for enhancements to state-administered
unemployment compensation (“UC”) programs, including:
so-called “gig economy” workers.
• Waiver of the first week waiting period for benefits payments (at the state’s option) is now
fully reimbursed by the federal government, retroactive to December 31, 2020.
• The PUA was extended from a March 14, 2021 expiration to September 6, 2021.
• Pandemic Emergency Unemployment Compensation (PEUC): Expands the total number
of weeks of benefits from 24 to 53, and through September 6, 2021.
• Pandemic Unemployment Compensation (PUC): Extended $300 per week in enhanced
benefits (as modified by the CAA’21) through September 6, 2021.
• Exempts the first $10,200 in 2020 unemployment benefits per individual from federal income
tax for households with incomes below $150,000 per year. Joint return filers who each
received unemployment income exceeding $10,200 can benefit from a $20,400 income
exemption.

Other ARPA’21 Individual Taxpayer Provisions
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ARPA’21 Fundamentally Restructured Key Portions of the Tax Code…for Now
• Earned Income Tax Credit. For 2021 only, ARPA:
• …raises the maximum EITC for adults without children from $543 to $1,502.
• …allows taxpayers to use either 2019 or 2020 earned income for their EITC calculation, whichever results in the
larger credit.
• …lowers the age eligibility for the childless EITC from 25 to 19 and eliminates the upper age limit, which currently
bars the credit for childless people age 65 and older.
• …eliminates the rule that bars individuals who have children without social security numbers from claiming the
childless EITC and allows individuals who are separated from their spouses to claim the EITC on a separate return if
they live with their child for more than half of the year.
• Child Tax Credit. For 2021 only, ARPA:
• …increases the Child Tax Credit maximum amount from $2,000 to $3,000 per child, or $3,600 for children under age
6. The increase in the maximum amount begins to phase out at $150,000 in income for married couples, $112,500
for heads of households and $75,000 for other parents.
• …extends the credit to 17-year-olds. (Previous law included only 16 year-olds and under.)
• …makes the credit fully refundable, meaning the entire credit could be provided as a refund if it exceeds an
individual’s income tax liability, instead of partially refundable as under previous law. It also requires half of the credit
to be paid in advance by having the IRS send monthly payments to families from July 2021 to December 2021.

Part II
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Business Benefits
and Their Impact on Human Capital Management

Paycheck Protection Program “Round Two”
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Forgivable Loans for Small Businesses – Now New and Improved!
Division N, Title III of the CAA’21 renews the “Paycheck Protection Program
(PPP Round Two).”
• The program is funded up to $284.45 billion, and is available ONLY to originate loans until March 31, 2021 or until funds are exhausted,
if earlier.
• The loan limit is $10 million per borrower (if this is the first PPP loan for the employer).
• The most attractive feature of the PPP? Up to 100% of the loan is forgivable (effectively, that portion of the loan is transformed into a
grant).
• Eligibility criteria for PPP loans begin with “first round” criteria, modified as follows:
Newly Eligible
• Certain 501(c)(6) organizations, (but see exceptions )
• Broadcast news organizations (NAICS 511110/5151)
• Housing coops (with 300 ee’s or less)
• Destination marketing orgs (with 300 ee’s or less)
• Businesses in bankruptcy
• Employers using the ERTC (but no wage double dipping)
Newly Ineligible
• 501(c)(6) organizations that are pro sports leagues,
lobbying groups or political campaigns
• Publicly traded companies (or controlled by members
of Congress/Executive Branch or their spouses)
• Employers not in operation on 2/15/2020
• Recipients of “Save our Stages” grants under this law.

Paycheck Protection Program “Round Two Point Five”
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Forgivable Loans for Small Businesses – Now New and Improved!
Title V, Sec. 5001 of the ARPA’21 adds funds and makes changes to the “Paycheck
Protection Program (PPP Round Two-Point-Five).”
• ARPA added $7.25 billion to the PPP fund “bucket” – a small amount because nearly half of the $284 billion of PPP funds from the CAA’21
remained to be lent at the time the bill was signed.
• The CAA’21 established March 31, 2021 as the application deadline (or until funds are exhausted, if earlier). A standalone bill
was signed by the President on March 30, “The PPP Extension Act of 2021” which extended the application deadline to May 31, 2021.
• The loan limit continues to be $10 million per borrower (if this is the first PPP loan for the employer).
• Eligibility criteria for PPP loans begin with “first round” and “second round” criteria, modified as follows:
Newly Eligible
• “additional covered nonprofit entities,” which are those not-for-profits listed in Sec. 501(c) of the Internal Revenue Code other
than 501(c)(3), 501(c)(4), 501(c)(6), or 501(c)(19) organizations, provided that:
• …the organization does not receive more than 15% of receipts from lobbying activities.
• …the lobbying activities do not comprise more than 15% of activities.
• …the cost of lobbying activities of the organization did not exceed $1 million during the most recent tax year ending prior to Feb. 15, 2020.
• …the organization employs not more than 300 employees.

The Paycheck Protection Program “Round Two”
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The PPP Gets a Very Rare Tax Treatment Exception (CAA’21)
Traditionally, the IRS does not permit “double-dipping” –
allowing the same dollar to receive two government financial
benefits.
• This traditional prohibition was well represented in last year’s rules surrounding the PPP, ERTC, and
the FFCRA-related paid leave tax credits, with most double-dipping prohibitions in place.
• The CAA’21 carves out a limited exception for the interaction of the ERTC and PPP loans, allowing
employers to take advantage of both programs, while still enforcing the prohibition on double-dipping.
• But the CAA’21 expressly permits employers to take tax deductions for valid employment
expenses paid with forgiven PPP loan dollars. For a corporation at the 21% corporate tax
rate, this amounts to 121% positive impact to the bottom line for each dollar so treated.
• This special tax provision only applies for loan dollars forgiven after December 27, 2020.
• [To see how unique this is, imagine for a moment that you purchased a new car for $30,000, paying $2,100 state
sales tax, bringing the total purchase to $32,100, then returned it within a day, received a full refund on every
dollar you paid, and the IRS still allowed you to take the $2,100 large purchase tax deduction on your annual
return!]

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Special Rules for “Second Draw” PPP Loans
Employers who already received a loan under the previous PPP
may apply for a “second round” loan, if they:
• Have fully spent out the proceeds from their first PPP loan by the date of their second round
disbursement
• Have no more than 300 employees (rather than the 500 employee limit applicable to first round
loans), or 300 employees per location for certain NAICS 72 hospitality organizations
• Have experienced, for any one or more quarters, a year-on-year decrease in gross receipts in
comparable quarters, of 25% or more (e.g., 1Q20 gross receipts at least 25% lower than 1Q19 gross
receipts…)
• Are limited to $2 million per entity, and $4 million aggregate to all members of a single corporate
group
• Have not been created or organized, nor have significant operations in the People’s Republic of
China or Special Administrative Region of Hong Kong, nor have directors who are residents of the
PRC.

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Calculating Eligible Loan Amounts (“Tweaked” from CARES Act)
The maximum loan amount is calculated as follows:
• 2.5 times the average total monthly payroll costs incurred in the one-year period before the loan is
made OR calendar year 2019 OR calendar year 2020;
• For hospitality second-draw borrowers (NAICS codes starting with 72), the limit is 3.5 times the
average total monthly payroll costs
OR
• For seasonal employers, average monthly payroll costs may be for any 12-week period from
2/15/2019 through 2/16/2020
OR
• A maximum of $10 million for a first-round borrower, $2 million for a second-round borrower.

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Eligible Payroll Spend for Proceeds (changes from original terms in purple)
What is INCLUDED in “payroll costs” under the PPP?
• Compensation (salary, wage, commission, or similar compensation, payment of cash tip)
• Payment for vacation, parental, family, medical, or sick leave
• Allowance for dismissal or separation
• Employer payments for all employee group insurance benefits, including medical, vision, dental, life,
disability
• Payment of any retirement benefit
• Payment of State or local tax assessed on the compensation of employees.
What is EXCLUDED in “payroll costs” under the PPP?
• Compensation per individual in excess of $100,000 annually (prorated for the applicable period)
• Withheld taxes such as Federal Income Tax Withholding and employer portion of federal taxes
• Compensation for employees with principal place of residence outside the United States
• Compensation for leave under any provision of the FFCRA (no “double-dipping”)
• Compensation to independent contractors

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Eligible Non-Payroll Spend for Proceeds (changes from original terms in purple)
What Non-Payroll Costs May PPP Proceeds Be Used For?
• Mortgage interest (but not payment or prepayment of principal)
• Rent
• Utilities
• Interest on any other debt obligations that were incurred before February 15, 2020
• Covered supplier costs (made pursuant to contract or order in effect before covered period)
• Covered worker protection expenditures (related to COVID prevention measures, such as
ventilation systems, physical barriers, drive through facilities, employee screening equipment)
• Covered property damage costs from public disturbances in 2020 not covered by insurance
• Covered operational expenses (including costs for processing payroll, HR, sales/billing
software)
The Covered Period:
• The new rules under CAA’21 offer employers flexibility: the “covered period” begins on the date
proceeds are disbursed and ends on any date the borrower chooses between 8 and 24 weeks from the
disbursement date.

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Loan Forgiveness
A back-and-forth series of complex rules
• At least 60% of loan proceeds must be used for covered payroll costs to be eligible for full forgiveness.
• Loan amounts are forgiven, and the forgiveness excluded from gross income, in amounts that do not
exceed the original principal amount, and, as listed on the previous slides, were used to fund:
• Payroll and related employment costs
• Interest payments on mortgages (but not principal repayments)
• Certain enumerated operational expenses
• Rent, and
• Utility payments.
Since one of the main purposes of these loans is to promote
employee retention, forgiveness amounts are reduced for
certain employee layoffs and compensation reductions.
The forgiveness amounts can be restored by rehires and
restoration of compensation levels to pre-reduction levels.

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Loan Forgiveness Reductions
Forgiveness amounts calculated per the previous slide are reduced,
dollar for dollar, for employee cuts and certain reductions in wages.
• The “forgiveness reduction factor” is calculated for workforce reductions, as follows:
• Calculate the average number of FTEs per month during the covered period, DIVIDED BY
• The average number of FTEs per month between (a.) 2/15/19 through 6/30/19 -OR- between (b.) 1/1/20
through 2/29/20. Note that seasonal employers may only use (a.) as the denominator of their fraction.
• The forgiveness reduction factor is calculated for compensation reductions, as follows:
• For any employee who was paid $100,000 or less on an annualized basis in any pay period of 2019,
• The amount of any salary reduction exceeding 25% of total salary,
in the most recent full quarter.
• Note that the forgiveness reduction factor for workforce reductions
is a percentage, and the forgiveness reduction factor for
compensation reductions is a money amount. Both are applied to
the expected forgiveness amount to yield net forgiveness amount.

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Loan Forgiveness Reductions: Let’s Take an Example!
Gamma Inc. has 200 employees on January 25, 2021. On that date, they
receive the proceeds of a $4 million from their local bank, guaranteed by
the SBA under the PPP program. They choose a 24 week covered period.
• They calculate their preliminary forgiveness amount, based on eligible expenses of payroll, rent, enumerated
operational expenses and utilities, as of July 12, 2021, as $3.25 million.
• For their workforce reduction factor, they choose to use January-February, 2020 as the comparison period.
• Their average active FTEs from 1/25/2021 - 7/12/2021 were 185.
• Their average active FTEs from 1/1/2020 - 2/29/2020 were 225.
• Their workforce retention factor is therefore 82.2%, meaning that 17.8%
of their forgiveness amount ($0.5785 million) will be disallowed.
• Additionally, counting only employees earning less than $100,000
annualized, and exempting the first 25% of salary reductions for
each of the remaining employees, Gamma cut total salaries by $223,000.
• Gamma’s total forgiveness reduction = $0.5785 million plus $0.223 million, or
a total of $0.8015 million, leaving $2.4485 million as the allowable forgiveness.

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Loan Forgiveness Reductions: Oh, But Wait! There’s More!
Forgiveness amounts that would be disallowed per the calculations
on the previous slides can be restored, dollar for dollar, by
rehiring/reinstating staff and restoring salaries:
• Employers so affected can restore their full forgiveness amounts if, by the end of their chosen
covered period (second round loans only):
• They rehire/reinstate employees to the previous employment levels
(Note: equivalent headcount, NOT self-same employees)
• They restore employee pay to levels not less than 75% of the compensation levels at March 31,
2020 (the “end of the most recent full quarter.”) Once again, for purposes of this compensation
testing, employees earning more than $100,000 annualized can be excluded from the calculations.
HCM Impacts: As these regulations indicate, the PPP and its loan
forgiveness provisions will require flexible point-in-time ad hoc or
standard reporting focusing on areas like headcount and compensation.

The Paycheck Protection Program “Round Two” (CAA’21)
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“Streamlined Forgiveness? Yes, PLEASE!”
Under the CAA’21, the Small Business Administration was given until
January 20, 2021 to issue a new, one-page form that certain PPP borrowers
may use to document their forgiveness application:
• The SBA issued that form, 3508S, on January 29, 2021. In typical federal government style, the one-page
application was 6 pages: one page application, one page voluntary EEO disclosure, and four pages of
instructions.
• The simplified process applies to borrowers of $150,000 or less
• The application consists of documentation of:
• The number of employees retained through the covered period of the loan
• The estimated total qualified payroll costs incurred during that period
• The total loan amount and the requested loan forgiveness amount.
• No documentation is due with the application, but it is required that borrowers retain this documentation for
four years for payroll and employment records, and three years for all other records, in case of audit.
• This streamlined application is available to all new borrowers and retroactive for prior borrowers who
haven’t already received forgiveness.
• You can find the new form here: https://www.sba.gov/document/sba-form-3508s-ppp-loan-
forgiveness-form-3508s

The Paycheck Protection Program “Round Two” (CAA’21)
32
“Streamlined Forgiveness? Yes, PLEASE!”

Business Benefits – Employee Retention Tax Credits
33
The CARES Act Added a Fourth Revenue Replacement Option for Employers
• Remember that the Families First Coronavirus Response Act (FFCRA) offered three
distinct tax credits to employers for leave paid to qualifying employees:
• For Paid Health Emergency Leave,
• For Emergency Paid Sick Leave, for an employee’s “own illness.”
• For Emergency Paid Sick Leave, to care for a specified family member.
• The CARES Act added a fourth tax credit – the Employee Retention Tax Credit, to
offset the costs of paying employees whom the employer must furlough or place on
reduced hours due to lack of business of government-ordered closing of the business.
• ERTC is available to employers of any size – under or over 500 employees.
• ERTC is available to §501(c)(3) not-for-profit employers, but is not available to government entities.
• The CAA’21 added an “advance payment” provision, which allowed the monetization of the credit
even before any wages have been paid for a company that had 500 or less employees in 2019.
The advance payment is based on 70% of the average quarterly payroll for the same quarter in
2019. If the actual credit due the company, as determined at the end of the quarter, is less than the
amount of the advance payment, the company is obligated to repay the excess amount to the
government. Use IRS Form 7200 to file for an advance on the ERTC.

34
ERTC Details – ORIGINAL 2020 Provisions
• The available tax credits per employee are calculated as 50% of the first $10,000 of eligible
wages, or $5,000.
• This was the maximum aggregate tax credit per employee for April 1, 2020 - December 31, 2020.
• The tax credit calculation includes the employer cost of health insurance for the creditable period.
• It is taken against employer “payroll taxes” owed but is “refundable” so it can exceed total taxes owed for
the period. Everything is reconciled on the quarterly Form 941.
• For an employer to qualify to take the credit, they must:
• Have conducted business in 2020 prior to the crisis, AND
• EITHER had their business operations fully or partially suspended by government order,
• OR experienced a calendar quarter year-over-year reduction in gross receipts of 50% or more. In this
case, they remain eligible for the benefit until gross receipts exceed 80% on that same comparison.
• IMPORTANT: For employers of 101 employees or more, the credit can only be taken on
wages paid to employees who are not working (i.e., retained in lieu of layoff or working a
reduced hours schedule imposed by the employer). For employers of less than 101
employees, all wages apply.

35
ERTC Details – REVISED CAA’21 2021 Provisions
• The available tax credits per employee are calculated as 70% of the first $10,000 of eligible
wages, or $7,000, PER QUARTER.
• This is the maximum aggregate tax credit per employee per quarter for January 1, 2021–June 30, 2021.
• The tax credit calculation includes the employer cost of health insurance for the creditable period.
• It is taken against employer “payroll taxes” owed but is “refundable” so it can exceed total taxes owed for
the period. Everything is reconciled on the quarterly Form 941.
• For an employer to qualify to take the credit, they must:
• Have conducted business in 2020 prior to the crisis, AND
• EITHER had their business operations fully or partially suspended by government order,
• OR experienced a calendar quarter year-over-year reduction in gross receipts of 80% or more.
• IMPORTANT: For employers of 501 employees or more, the credit can only be taken on
wages paid to employees who are not working (i.e., retained in lieu of layoff or working a
reduced hours schedule imposed by the employer). For employers of less than 501
employees, all wages apply.

36
ERTC Details – REVISED ARPA’21 2021 Provisions
• The available tax credits per employee continue to be calculated as 70% of the first
$10,000 of eligible wages, or $7,000, PER QUARTER.
• This is the maximum aggregate tax credit per employee per quarter for the period January 1, 2021 – June 30, 2021
under the CAA’21. The ARPA’21 extended the deadline two more calendar quarters, to December 31, 2021.
• Beginning in the third quarter of 2021 (July 1), the following additional modifications will
apply to the ERTC:
• Recovery startup businesses that began operating after February 15, 2020 are now considered qualified
employers, if they meet certain gross receipts requirements. A recovery startup business will be eligible for an
increased maximum credit of $50,000 per quarter, even if the business has not experienced a significant decline in
gross receipts or been subject to a full or partial suspension under government order.
• A ‘‘severely financially distressed employer” (defined as having suffered a decline in quarterly gross receipts of
90% or more compared to the same calendar quarter in 2019) will be able to treat all wages (up to the $10,000
limitation) paid during those quarters as qualified wages. This rule will allow a large employer (i.e., an employer
with 501 or more employees) under severe financial distress to treat those wages as qualified wages whether or
not its employees actually provide services.
• The statute of limitations for assessments relating to the ERTC is extended until five years after the date that
the original return claiming the credit is filed or treated as filed. (Example: 941 for 4Q2021 is filed timely on April
15, 2022; this return can be audited vis-à-vis the amount of ERTC claimed, until April 14, 2027.)

37
Additional Changes to the ERTC (CAA’21)
• The original law did not permit a single employer to partake of the ERTC
and use PPP loan proceeds for the same covered period.
• The new law loosens this restriction: an employer may now participate in
both programs, however the same wages may not be used both for
forgiveness under the PPP AND the ERTC. (No “double-dipping.”)
• A repeated complaint under the prior ERTC rules was that, while the total
cost of health insurance premiums (employer AND employee if pre-tax)
was includable in the credit calculations, this only applied to employees
being paid wages – it excluded employees on layoff or furlough where the
employer was paying healthcare continuation. The new ERTC rules “fix”
this and ALL health insurance premiums are includable in the tax credit
calculation.

FFCRA Provisions Extended
38
The Families First Coronavirus Response Act – REVISED CAA’21 2021 Provisions
• The FFCRA established two new forms of mandated paid leave for qualifying employers
and employees: Paid Health Emergency Leave (as an amendment to the Family &
Medical Leave Act), and Emergency Paid Sick Leave, and those two leave types offer
three types of tax credits:
• For Paid Health Emergency Leave, up to $200 per day for wages paid for up to 10 weeks ($10,000
maximum), for covered reasons
• For Emergency Paid Sick Leave, up to $511 per day for wages paid for up to 10 days ($5,110
maximum), for an employee’s “own illness.”
maximum), to care for a specified family member.
• All of the above tax credits require that the employee be personally impacted by Coronavirus or
COVID illness.
• The CAA’21 extended availability of the tax credits through March 31, 2021, but did not
renew the mandate to offer these leave types to employees (for employers of certain
headcounts and below), which allowed the mandate to expire on December 31, 2020.

39
The Families First Coronavirus Response Act – REVISED ARPA’21 2021 Provisions
• The FFCRA established two new forms of mandated paid leave for qualifying employers
and employees: Paid Health Emergency Leave (as an amendment to the Family &
Medical Leave Act), and Emergency Paid Sick Leave, and those two leave types offer
three types of tax credits:
• For Paid Health Emergency Leave, up to $200 per day for wages paid for up to 10 weeks ($12,000
maximum), for covered reasons
maximum), for an employee’s “own illness.”
maximum), to care for a specified family member.
• ARPA’21 extended availability of the tax credits through September 30, 2021, but did not
reimpose the expired mandate to offer these leave types to employees (for employers of
certain headcounts and below).

40
• ARPA’21 revised the original FFCRA paid leave provisions in a number of important
ways, all effective April 1, 2021:
• ARPA expands the qualifying reasons for which leave can be taken (and tax credit claimed) under the
EPSL and/or EFML, to include leave:
• …to obtain COVID-19 immunization;
• …to recover from an injury, disability, illness or condition related to the COVID-19 immunization; and
• …to seek or await the results of a diagnostic test for, or medical diagnosis of COVID-19, where the employee has been
exposed to COVID-19 or the employer has requested such a test or diagnosis from the employee.
• ARPA strikes the provision in the FFCRA requiring the first two weeks of paid Extended FMLA (Paid
Health Emergency Leave) to be unpaid. This is why the maximum allotment per employee has been
adjusted from $10,000 to $12,000.
• ARPA “resets” the 10 day (or 80 hour) allotment limit on Emergency Paid Sick Leave (EPSL) effective
April 1, 2021. (Note: since extending FFCRA leave provisions is optional per employer, we await
DOL guidance on whether, if an employer chooses to extend, they MUST reset the entitlement to
claim the tax credits.)

41
• ARPA’21 revised the original FFCRA paid leave provisions in a number of important
ways, all effective April 1, 2021:
• ARPA also imposes important new non-discrimination restrictions on the tax credits: if employers
choose to extend FFCRA leave benefits, they may only take the available tax credits if, in awarding
the paid sick/FMLA, they do not discriminate in favor of highly compensated employees, full-time
employees, or on the basis of an employee’s tenure with the employer.
• Under ARPA, FFCRA tax credits are still available only to employers with fewer than 500 employees
as of the date the leave is to be taken.
• There is a fair amount of confusion about whether, under ARPA, FFCRA paid leave is newly available
to state and local government employers. (Under FFCRA and applicable CAA’21 modifications, state
and local governments were NOT eligible employers, no matter the size. Please check with your
legal advisors before assuming that “either side of this argument is correct” at this point, and
hopefully DOL and IRS will issue further, clarifying guidance.

Part III
42
Employee Benefits-Impacting
Provisions of ARPA’21
ON

43
ARPA Makes Substantial COBRA Changes
ARPA Makes Substantial Changes to COBRA Coverage
For the period April 1 to September 30, 2021, ARPA requires
employers to cover 100% of the cost of COBRA for qualifying
beneficiaries:
• Healthcare coverage loss reasons included:
• Reduction in hours
• Involuntary termination (note that employees who voluntarily quit are not covered by this provision)
• This is NOT just “on a go-forward basis”, it includes employees/ex-employees who:
• Lose coverage for the above reasons from now through September (and elect COBRA)
• Are already enrolled in COBRA coverage
• Did not elect COBRA when it initially became available to them but are still eligible based on timing
(ex-employee must be notified of a new, $0 premium offer). A “special enrollment period” for this
type of employee opens April 1 and ends 60 days after delivery of the notification to them.
• Elected COBRA coverage initially but let the coverage lapse.

44
More details about the 100% COBRA cost subsidy:
• ARPA does not extend any employees’ eligibility for COBRA from the statutory 18-month
period.
• Therefore, employers may need to “look back” as far as November, 2019 to find all those involuntarily
terminated or reduced-hour employees who may be eligible for this benefit (and therefore be required
to be notified of the special enrollment period.)
• If an ex-employee’s 18-month COBRA entitlement begins after April 1, 2021 or ends before
September 30, 2021, their 100% subsidy period will be shorter than 6 months.
• Example: Acme Industries terminated Rod Runner on December 1, 2019, and he became eligible for
COBRA coverage on January 1, 2020. His 18-month COBRA period would end June 30, 2021. So
for Rod, the COBRA subsidy would be available for only three months, due to the expiration of the 18-
month COBRA coverage period in the middle of the ARPA COBRA subsidy window.
• As with COBRA entitlement generally, eligibility for the subsidy ends when a beneficiary
becomes eligible for another group health plan or Medicare. New statutory penalties apply to
beneficiaries who fail to notify plan sponsors when they lose eligibility for subsidized COBRA.

45
More details about the 100% COBRA cost subsidy (Funding):
• Under ARPA, the COBRA subsidy is funded entirely by the federal government.
• However, employers must “front” the money for the subsidy by offering the coverage cost-free to
qualified individuals and then claim a tax credit against employment taxes (similar to ERTC and
FFCRA paid leave current liability offsets we are all used to, by now.)
• Expect additional modifications to the quarterly 941 report (starting in second quarter) to account for
this reconciliation.
• We assume that the premium tax credit employers are permitted to take is the ENTIRE COBRA
premium: employee share PLUS employer share PLUS 2% administrative fee.
• The subsidy applies both to fully insured and self-insured plans, as well as to plans which are self-
funded but insured and not subject to COBRA but ARE subject to required continuation coverage
offers under state law. The presence of a TPA in the COBRA administration process does not
impact this new requirement; employers must be careful to coordinate closely with their TPA on
issues like required notifications to ensure none of the new statutory requirements are missed by
both parties.

46
More details about the 100% COBRA cost subsidy (Notices):
• Under ARPA, a number of new or modified notices must be sent to COBRA qualifiers.
• COBRA election notice packets must be modified to include the following additional information:
• The procedure, including any necessary paperwork, for establishing eligibility for the COBRA subsidy.
• Contact information for the individual responsible for providing additional information about the premium subsidy.
• For those who became eligible for COBRA prior to April 1, 2021, a description of the mandated special election period
(generally, April 1 through May 31, 2021).
• An explanation that a qualified beneficiary is required to notify the plan if they lose eligibility to receive the COBRA subsidy
due to eligibility for another group health plan or Medicare coverage.
• A description of the penalty for failure to notify the plan of disqualification.
• An explanation of a qualified beneficiary’s right to subsidized COBRA coverage, and any conditions on eligibility to the
subsidy.
• If plan rules permit, the notice can include information about electing another plan which may be
less expensive for the beneficiary after the subsidy period expires.
• The above special, limited-time notices can be made via modification of regular notices, or “insert” of
a separate notice delivered with the regular notice.

47
More details about the 100% COBRA cost subsidy (Notices, ctd.):
• While employers are permitted to modify and distribute their notices on their own (subject to
inclusion of all the details previously noted), DOL is required to issue model notice language
no later than 30 days after ARPA’s enactment, by May 11.
• An additional notice is required for all COBRA beneficiaries who have elected coverage under
the zero-cost terms, notifying them of the impending end of the subsidy. This notice must be
delivered no earlier than 45 days before, nor later than 14 days before, the subsidy ends (i.e.,
between August 16 and September 16, 2021.)
• So, to recap, there are three new/modified notices required under the ARPA COBRA
subsidy:
• Modification of “regular” COBRA election notices for those with a qualifying event on or after April 1.
• Notification to all those who qualify but previously failed to elect or dropped coverage by non-payment
of the upcoming “special election period.”
• Notification for all those who elect COBRA coverage with the subsidy, of the expiration of the subsidy.

48
Free COBRA Coverage and the “Law of Unintended Consequences”:
• Here are just a few ways that “free-free-free!” COBRA for six months may upend your
HR/Benefits planning:
• For beneficiaries: employees and ex-employees should consider the possibility of future gaps in coverage.
Example: An hours-reduced employee is attracted by the free COBRA premiums for six months (regularly
$1,500 family coverage COBRA premium) but cannot afford the premiums on October 1, 2021. Remember that
regular expiration of a COBRA qualifying 18-month period DOES trigger a special enrollment period in Exchange
coverage; voluntarily dropping COBRA coverage – for whatever reason – does NOT!
• For plan sponsors: Significant risk of increased adverse selection? A zero dollar premium is attractive,
and “stop-gap” users of COBRA tend to be higher utilizers of the benefits under the plan.
• For self-funded employers: Will the tax credit for the COBRA premium even cover all costs? Self-funded
employers tend to use estimates of the pro-rata cost per participant for healthcare coverage as the COBRA rate.
• For HR executives (in consultation with legal counsel): Some employers rely on a paid COBRA coverage
benefit as consideration for a release of claims on termination. But a statutorily-mandated cost reduction
removes that benefit from the “consideration equation.” So, for example, a severance plan that only offers
payout of unused vacation, plus 6 months of paid COBRA coverage, in a state where unused vacation must be
paid out, could very well be found to lack consideration, and require additional benefits/pay to be valid.

49
Miscellaneous and Benefits Impacting Provisions
ARPA’21 Significantly Expands ACA Premium Subsidies in the Exchanges *
Designed to implement the biggest reductions in Marketplace
healthcare premiums since the ACA’s inception, ARPA:
• …reduces the maximum spend on exchange-purchased benchmark plan coverage from
9.83% of household income to 8.5% of household income (through 2022).
• …eliminates the “subsidy cliff” at 400% of FPL ($51,520 for an individual; $106,000 for a family
of four). As a result, this expands, by at least 20%, the number of individuals who, when
shopping for exchange coverage, will receive an advance premium tax credit.
• …includes a special provision for the unemployed: taxpayers who receive unemployment
compensation during any single week beginning in 2021 may be eligible to receive premium
tax credits to help pay for all of their 2021 Marketplace coverage.
• …opens up a new “Special Enrollment Period, from April 1 to May 15, 2021, for consumers to
take advantage of the new lower premiums and higher premium tax credits.
* But Wait! I’m An Employer Offering Healthcare to My Employees! Why Would I Care?

50
Refresher: The Employer Mandate
Effective for plan years beginning January 1, 2014, the Affordable Care Act specifies one
penalty if an applicable large employer (ALE) chooses not to offer health insurance to at least
95% of full-time employees (“pay”) and a different penalty if that ALE offers insurance but it
fails to meet specified coverage levels (“play”):
PPACA §4980H(a)
Coverage Not Offered
PPACA §4980H(b)
Coverage Offered Doesn’t Meet
Specified Levels
• Triggered if at least one
employee receives tax credits
or cost-sharing reductions
through an Exchange
• $173.33/month1 times the total
number of full-time employees
(30 or more hours in a week)
less first 30
• $260.00/month1 times the
total number of full-time
employees who receive
tax credits or cost-
sharing reductions
through an Exchange
1Original 2014 amount, indexed for inflation. (For 2021, the 4980H(a) penalty is $225.00/month and the 4980H(b) penalty is $338.33/month.)
According to kff.org,
ARPA increases the
number of individuals
eligible for a Marketplace
subsidy/APTC by 20%,
from18.1 million to 21.8
million.

Part IV
51
Is OSHA About to “Drop the Hammer?”

Where is OSHA?
52
The Pressure is Building on OSHA to Formalize Workplace Policies
• On January 21, 2021, President Biden’s first full day in office, he issued an Executive
Order entitled “Executive Order on Protecting Worker Health and Safety”
• The order called on the Department of Labor to, among other actions:
• …consider whether any emergency temporary standards on COVID-19, including with respect to masks in the
workplace, are necessary, and if such standards are determined to be necessary, issue them by March 15, 2021;
• …review the enforcement efforts of the Occupational Safety and Health Administration (OSHA) related to COVID-19
and identify any short-, medium-, and long-term changes that could be made to better protect workers and ensure
equity in enforcement.
• ARPA allocated an additional $75 million to OSHA for enforcement. This single bonus allocation
increased OSHA’s annual budget by an estimated 13%, and can pay for a BUNCH of new
inspectors and enforcement agents.
• Meanwhile, as the signing of ARPA approached on March 11, the number of states completely
dropping any masking requirement they may have previously had, was increasing, to 16.
• On March 12, OSHA officials called the head of the US Chamber of Commerce to relay the news
that OSHA definitely would be issuing a rule on masking in the workplace, but that they would not
meet the March 15 deadline to do so.
• Fifteen days later, employers across the country still wait…

53
Questions?
More Questions:
Add them to the chat box!
We will publish a follow-up blog with additional Q &A
in the following locations:
Blog section on our site:
https://www.ascentis.com/blog/

54
How Ascentis HR and Learning Management Can Help
Ascentis allows you to focus on the bigger picture with integrated
HR and Learning Management software. We provide real-time
data, easy reporting, and the ability task your employees with
virtual trainings to ensure your business is compliant.
• Ascentis HR provides over 300 on-demand reports, point-in-time
reports and configurable fields
• Fully integrated LMS incorporating unlimited content sources,
mobile access, and EZ-Upload (“SCORM Lite”) integration
capabilities
• LMS full catalog of over 2,000 content objects with categories
• Centralized company-branded employee and manager portals
deliver reliable information to help with managing time off such as
Emergency Paid Sick Leave and Extended Paid FML
Recruiting &
Onboarding
Talent
Management
HR &
Benefits
Payroll
Time &
Attendance
Ascentis

55
Contact Us
bob.greene@ascentis.com
info@ascentis.com
www.ascentis.com
800.229.2713

ARPA's Impact on Stimulus Payments, Unemployment Benefits

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