(Mar. 11, 2021) On March 11, 2021, President Biden signed into law H.R. 1319, a $1.9 trillion supplemental appropriations bill commonly referred to as the American Rescue Plan. Although Congress enacted a number of emergency appropriations measures in response to the coronavirus pandemic throughout 2020, including the CARES Act and the Families First Coronavirus Response Act, this act marks the first passage of major spending legislation under President Biden.
The bulk of the American Rescue Plan’s provisions target individuals and families who have been financially impacted by the pandemic. The act extends unemployment benefits of $300 per week through September 6, 2021, and provides a 100% subsidy of continuation of health coverage (COBRA) insurance premiums. In effect, the COBRA provision allows unemployed workers to maintain healthcare coverage under their former employers’ insurance plans through September 2021 at no cost. The legislation also allocates over $30 billion for rental assistance and $10 billion for mortgage assistance; however, it does not extend the current federal eviction moratorium, which is set to expire at the end of March.
This act further establishes the criteria for a third round of stimulus payments to individuals and families. Under the act, persons earning under $75,000 annually will receive $1,400 direct payments. Heads of household with an annual income under $112,500 and couples filing jointly who earn less than $150,000 annually will receive $1,400 per person. Eligible households will also receive an additional $1,400 for each dependent claimed on their most recent tax filings. These payments will be reduced and phased out incrementally for individuals who have an annual adjusted gross income above these amounts. For example, individual filers with an income over $80,000 are not eligible for direct stimulus payments.
This legislation similarly expands the child tax credit and creates a mechanism for direct monthly payments to households with children who are under 18. Families who meet the law’s income thresholds will receive $3,000–$3,600 annually per child, with the amount varying depending on each child’s age. These payments will be made over the course of a year to help subsidize ongoing childcare costs.
Other provisions include funding for COVID-19 testing, contact tracing, and vaccine distribution. The American Rescue Plan also allocates $350 billion for state, local, tribal, and U.S. territorial governments to help minimize tax revenue shortfalls. Although members of the House and Senate attempted to include a provision in this act increasing the federal minimum wage to $15 per hour, that section was eventually stricken from the final version of the law.