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Key Employee Benefit Provisions of the American Rescue Plan Act of 2021
The American Rescue Plan Act of 2021 (“ARPA”), the landmark $1.9 trillion legislative package that President Biden signed into law on March 11, 2021, contains a number of significant employee benefit plan changes that should provide much-needed relief for plan sponsors and participants impacted by the COVID-19 pandemic. The key benefits and compensation provisions of the ARPA are summarized in this Alert, and include (i) a six-month 100% subsidy for COBRA premiums for certain former employees, (ii) an increase in dependent care assistance plan (DCAP) exclusion limits for 2021, (iii) a reduction in single employer pension plan minimum required contributions, (iv) actions to address the insolvency concerns of multiemployer pension plans facing critical or declining financial status and the Pension Benefit Guaranty Corporation (PBGC) and (v) an expansion of the “covered employee” definition under section 162(m) of the Internal Revenue Code of 1986 (the “Code”). Plan sponsors and service providers should become familiar with these changes as certain plan amendments and participant notices will have to be drafted in 2021 in order to comply.