Employers can recover the amounts that they expend on the ARPA COBRA subsidy by claiming tax credits against the 1.45% employment tax they pay for hospital insurance.
The American Rescue Plan Act (ARPA), signed into law by President Biden on March 11, 2021, includes provisions that will significantly impact plan sponsors and administrators of health and cafeteria plans. The ARPA also impacts pension plan funding requirements and executive compensation deductions available to employers. These provisions and their potential impact on plan sponsors, plan administrators and employers are discussed in more detail below.
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