Employee Benefits Market Check Survey: Employer Actions as a Result of ARPA

In March 2021, Congress passed the American Rescue Plan Act (ARPA) which was designed to provide COVID-19 relief to many. Included within the bill were several provisions that impact employers, and the employee benefits they offer. Most prominent were (1) a federal subsidy to cover 100% of the cost of COBRA coverage for up to six months for employees that experienced an involuntary termination of employment or reduction in hours and (2) an increase in the amount employees can contribute to their DCAP (from $5,000 to $10,500).

We conducted a poll during two webcasts in March 2021 to gain insight from employers regarding their current administration and where the legislation might create some challenges. The results are in the charts below.*

Key Findings
Because the COBRA subsidy is only for those employees that experience an involuntary termination of employment or reduction of hours, those employers not tracking the type of termination will have some additional legwork, either on their own or in conjunction with their COBRA administrator. Further, those employers administering COBRA internally will need to ensure that eligible individuals are notified by May 31, 2021.

With daycare centers resuming operations, employees returning to work, and the school year coming to an end, employers who haven’t decided on the DCAP increase should strongly consider it as employees may welcome this benefit. However, making this change will require some additional administration and communication and could make it more difficult to satisfy the DCAP non-discrimination tests. All of this should be contemplated. Should you have any questions regarding any of this information, please contact your local Assurex Global adviser.

ARPA – American Rescue Plan Act
COBRA – Consolidated Omnibus Budget Reconciliation Act
DCAP – Dependent Care Assistance Plans

*Based on 495 employer respondents. March 25 & 26, 2021