American Rescue Plan Act of 2021 (H.R. 1319)

The American Rescue Plan Act of 2021 allocates an additional $300 billion in unemployment benefits through September 6, 2021. Individuals already receiving benefits will generally be permitted to continue receiving benefits for up to an additional 25 weeks. The Plan would extend four (4) COVID-19 related unemployment benefit programs through September 6, 2021:


Further, although unemployment benefits are typically taxable, the Plan provides that up to $10,200 of unemployment benefits from 2020 will be tax-free for households with a combined income of less than $150,000. On March 23, 2021, the IRS announced that unemployment compensation will not be counted towards this $150,000 income limit. IRS.gov Publications.

The Act also provides relief to individuals affected by the COVID-19 pandemic by a tax-free subsidy that will pay 100% of the COBRA continuation premium for individuals who are eligible for COBRA as a result of an involuntary termination of employment or a reduction in hours and who are, or could have been, eligible for COBRA between April 1, 2021 and September 30, 2021 (the "Premium Assistance Period"). Assistance eligible individuals include COBRA qualified beneficiaries who experienced an involuntary termination of employment or a reduction in hours and who have COBRA coverage during the Premium Assistance Period. Individuals who be eligible for assistance but for the fact that they did not timely elect or dropped COBRA coverage before April 1, 2021, are also eligible for subsidized coverage if they are still within their maximum COBRA coverage period.

This comes on top of the prior Department of Labor's Unemployment Insurance Program Letter No. 16-20, Change 5, which instructs state unemployment agencies that individuals in the following three circumstances and categories are eligible to receive unemployment benefits:
Unemployment benefits made available under these criteria will be funded through the federal Pandemic Unemployment Assistance (PUA) program. PUA is intended to be a benefit of last resort. These additional eligibility provisions apply retroactively to the beginning of the PUA program, though individuals who did not previously file for PUA "on or before December 27, 2020 are limited to weeks of unemployment [benefits] beginning on or after December 6, 2020."

 

 

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