The COVID-19 pandemic continues to challenge employers and employees as they navigate business interruption, return to work policies, COVID-19 testing, and vaccinations. Additionally, in their roles as plan sponsors and plan participants, employers and employees, respectively, have also had to deal with many changes surrounding their employee benefit plans over the last year. Just two weeks ago we published this Alert addressing the extension of certain employee benefit plan and participant-related deadlines as set forth in EBSA Notice 2021-01. Just as employers were digesting this information and figuring out how to apply it to their plans and communicate it to their employees, the American Rescue Plan Act (“ARPA”) became law.

The ARPA, which was signed into law by President Biden on March 11, 2021, contains many provisions that affect employers and individuals, including a few provisions that directly affect them in their roles as plan sponsors and plan participants. Specifically, the ARPA temporarily changes two long-standing benefit plan provisions related to Dependent Care Assistance Programs (“DCAPs”) and the continuation of health coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”). Although these provisions are meant to provide relief and assistance, plan sponsors may find the administration of these laws challenging, especially while considering the implications between these provisions and those in Notice 2021-01 and the Consolidated Appropriations Act (“CAA”). We discussed the challenges of the CAA at the beginning of 2021 in this Alert.  The two key benefit plan-related provisions of the ARPA are outlined below.