On Wednesday, March 10, 2021, the United States Congress passed the American Rescue Plan Act of 2021 (the "Act"), a massive $1.9 trillion stimulus relief package that is intended to provide support to individuals and businesses affected by COVID-19. President Biden signed the Act into law on Thursday, March 11, 2021.

The Act follows two other Federal stimulus relief acts: The Coronavirus Aid, Relief and Economic Security Act ("CARES" Act) enacted in March 2020, and the Consolidated Appropriations Act enacted in December 2020.

The principal components of the Act are summarized below. The page references below refer to the version of the Act passed by both houses of Congress.

Individual stimulus checks

The Act authorizes a one-time, direct payment of $1,400 per person for individuals making under $75,000 and persons filing joint returns making under $150,000. See Act, p. 342, § 6428B(b). The Act also provides $1,400 per dependent. Id. Payments will gradually decrease above those income levels and disappear entirely for individuals making over $80,000 and persons filing joint returns making over $160,000. Id., p. 343, §§ 6428B(d)(1)-(2).

Unemployment benefits

The Act extends Federal unemployment benefits by $300 per week through September 6, 2021. Id., p. 290, § 9011(a)(1)(B). The Act also waives Federal income taxes for the first $10,200 of unemployment benefits received in 2020 for households earning under $150,000. Id., p. 299-300, § 9042(c)(1).

Earned Income Tax Credit ("EITC")

 The Act increases the maximum EITC credit for workers without children and extends eligibility to more people, including young adults aged 19-24 who are not full-time students and people aged over 65. Id., p. 381-83, §§ 9621(b)(1)-(2).

Child Tax Credit

The Act temporarily expands the child tax credit, previously worth up to $2,000 per child under the age of 17. The expanded tax credit would be worth up to $3,600 for children up to age 5 and up to $3,000 for children 6 to 17 years old. Id., p. 360, § 9611(a)(i)(3). The Act also provides that the Federal government will send advance payments of the credit to Americans in periodic installments during the second half of 2021. Id., p. 363, § 7527A(a).

Nutrition Assistance

The Act extends the 15% increase in the Supplemental Nutrition Assistance Program ("SNAP") benefits, also known as food stamps or Electronic Benefit Transfer ("EBT") benefits, through September 30, 2021. Id., p. 22, § 1101(a). It also contains $880 million (or the sum of $490 million to be available until September 30, 2022, and $390 million to be available until September 30, 2024) for the Special Supplemental Nutrition Program for Women, Infants and Children ("WIC"). Id., p. 28-29, §§ 1105(e), 1106. Likewise, the Act allows states to continue the Pandemic-EBT program. Id. p. 31, § 1108. The Pandemic-EBT program provides families with funding to replace free- and reduced-price meals in cases where their children's schools are closed, as previously established under the CARES Act in March 2020. Id.

Housing Aid

The Act will send an aggregate of $20 billion1 to state and local governments to aid low-income households with rent and utility bill assistance. Id., p. 141, § 3205(a)(1)). Additionally, nearly $10 billion is authorized to help homeowners struggling to pay mortgages and property taxes. Id., p. 146-47, § 3206(a).

Optional Paid Sick and Family Leave

Employers who voluntarily provide paid sick and family leave through October 1, 20212 will continue to receive tax credits. Id., p. 418, § 3205(a)(1). The Act, however, does not reinstate the benefits that expired in December 2020, including paid sick leave for workers who contracted COVID-19 or paid family leave for workers staying home with children while schools are closed.

Education and Childcare

The Act provides nearly $130 billion through September 30, 2023 to help elementary and secondary school students return to the classroom. Id., p. 33, § 2001(a). The funds must be used to update ventilation systems, reduce class sizes, implement social distancing, and/or purchase personal protective equipment. Id., p. 35-40, § 2001(e). The Act also allocates $39 billion to childcare providers to fund similar initiatives as well as to help struggling families pay their childcare costs. Id., p. 63-65, §§ 2201(a), 2202(b). The $39 billion dollars is split between nearly $15 billion for the Child Care and Development Block Grant and nearly $24 billion for Child Care Stabilization funding. Id.

Vaccine Distribution and Testing-Related Expenses

The Act provides funding for COVID-19 vaccine distribution, administration, COVID-19 testing, contact tracing, genomic sequencing, and efforts related to global health security and global disease detection and response. Id., p. 80-91, § 2301(b). The Act also appropriates an additional $50 billion to remain available until September 30, 2025 for FEMA's Disaster Relief Fund to cover costs associated with major disaster declarations, such as reimbursements for funeral expenses. Id., p. 188-89, § 4005. All states have received major disaster declarations for the COVID-19 pandemic, and as a result, FEMA may offer individuals and households reimbursements for their COVID-19-related funeral expenses incurred between January 20, 2020 and December 31, 2020.3

Affordable Care Act and COBRA Subsidies

The Act will temporarily increase subsidies for people purchasing health insurance through the Affordable Care Act's marketplace. In 2021 and 2022, enrollees will pay no more than 8.5% of their income towards coverage, and those earning more than the current cap of 400% of the Federal poverty level will also become eligible for subsidies. Id., p. 462-63, § 9661(a)(iii)(II). Special enhancements to the credit are also included for individuals receiving unemployment compensation in 2021. Additionally, individuals whose job was involuntarily terminated or hours reduced will be able to enroll in (or stay on) their former employer's health insurance, with Federal government subsidies covering the full cost of their COBRA premiums from April 1, 2021 through September 30, 2021. Id., p. 314-15, § 9501(a)(1). The subsidy period terminates earlier if the individual becomes eligible for certain other group health plan coverage or Medicare. Employers will receive a credit for the COBRA premium subsidy through a refundable payroll tax credit against the employer's quarterly taxes.

Small Business Relief

The Act allocates $15 billion for targeted Economic Injury Disaster Loan ("EIDL") payments, which provides economic relief to businesses that are currently experiencing a temporary loss of revenue due to COVID-19. Id., p. 205, § 5002(b). The Act also allocates an additional $7.25 billion for the Paycheck Protection Program's ("PPP") forgivable loans. Id., p. 204, § 5001(d)(2). It does not extend the PPP's current application period, which is scheduled to close on March 31, 2021. The Act further provides more grants to small businesses in sectors hardest hit by the pandemic-related economic slowdown. This includes:

  • $28.6 billion for restaurants, bars, and other eligible providers of food and drink through the Restaurant Revitalization Fund.4 Id., p. 212, § 5003(b)(2).
  • $23 billion for the airline industry, which includes $14 billion for eligible air carriers and $1 billion for eligible contractors, see id., p. 262, § 7301(b)(1)(A)-(B), and $8 billion for airports. Id., p. 234, § 7102(a)(1).
  • $1.25 billion for shuttered venue operators, such as music venue operators, theatre producers, and other performing arts organizations. Id., p. 222, § 5005(a).

The Act does not include an increase in the Federal minimum wage. House legislation originally proposed gradually increasing the Federal minimum wage to $15/hour by 2025 and extending the minimum wage to tipped workers, youth workers, and workers with disabilities. The Senate parliamentarian, however, ruled in late February that the House's proposal violated strict procedural rules in the Senate related to a budget reconciliation process that would have shielded the bill from a filibuster in the Senate. As a result, the minimum wage provision was not included in the Senate bill or the Act, as enacted.

*  *  *

We note that COVID-19 legislation at both the state and Federal levels is changing every day, and the information contained in this Memorandum is accurate only as of the date set forth above.

Footnotes

1 CNN, "Congress Passes Biden's Covid-19 Stimulus Bill," available at https://www.cnn.com/politics/live-news/stimulus-house-vote-03-10-21/index.html.

2 Id.

3  CBS, "Stimulus Includes $2 Billion for Funerals of COVID-19 Victims.  Will Families Get Money?," available at https://www.cbsnews.com/news/covid-relief-bill-2-billion-funerals-victims/; FEMA, "Recovery & Economic Support," available at https://www.fema.gov/disasters/coronavirus/economic.

4 For additional information regarding the Restaurant Revitalization Fund set forth in the Act, please see Winston & Strawn's COVID-19 Restaurant Revitalization Fund summary that will be separately published at a later date. 

Originally Published by Winston & Strawn LLP, March 2021

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.