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Tax Credits Available For Employers Allowing Employees to Get COVID Vaccine

American Rescue Plan | Human Resources | Fahrenheit Advisors

With the hardships COVID-19 brought to many employees, they may not be able to afford lost wages by taking time off to get vaccinated or to recover if needed. To help get these employees get vaccinated, President Biden announced that as part of the American Rescue Plan, no employee in a company with less than 500 employees will lose pay or need to use paid time off to get the shot or recover from the shot. Although specifically aimed at getting more individuals vaccinated, it also covers any leave taken by employees who are not able to work or telework due to reasons related to COVID-19. You can find more details from the Treasury Department here.

If your company has less than 500 employees, you may be eligible for up to $17,000 in reimbursements per employee if:

  1. You offer employees paid leave to receive a COVID-Vaccine or to recover from the vaccination.
  2. You offer paid sick or family leave to employees who are not able to work or telework due to reasons related to COVIDovid-19.

From April 1, 2021 to October 31, 2021, businesses may take credits for wages paid for leave per the following limits:

 

Vaccination/Sick Leave:

Up to two weeks per employee, limited to $511 daily or $5,110 in aggregate, totaling up to 100% of the employee’s regular rate of pay. For example, if the employee’s rate of pay is $400 per day and he/she was out the full two weeks, the employee would receive $4,000.

 

Paid Family Leave for COVID-19 Related Reasons:

Paid family leave is paid up to 12 weeks, limited to $200 per day or $12,000 in aggregate at 2/3rds of the employee’s regular rate of pay. For example, if an employee’s total pay for the 12 weeks was $14,000, the employee would receive 2/3rds or $9,250 if they were out the full 12 weeks. If the employee’s total pay for 12 weeks was $20,000, they would only receive $12,000, the capped amount.

As an employer, you will need to ensure your employees are informed of these changes effective April 1, 2021 through September 30th, 2021 through a memo or whatever method is most effective. Both of these are variations on the paid COVID-19 leave policies from 2020.

When announcing these, it is a great opportunity to encourage your employees to get vaccinated on a voluntary basis. For health and workplace safety, it may be optimal to have all employees vaccinated. However, the state and the federal governments are still considering what guidelines are appropriate for all employers regarding vaccinations.

Some things to consider for your company are:

  • When are employees returning to the worksite? Is it phased or all at once? How many employees will be at the worksite at one time?
  • Are you in the health care, travel, retail, or other business where your employees could put clients at risk?

With so many exceptions, having a policy that strongly encourages vaccinations, but does not try to mandate them, may be easier to administer until we have more legal guidance.

As an employer, you will be able to claim your credits from April 1 – September 30, 2021 using the Form 941 that will explain how to reflect the reduced liabilities. In anticipation of the filing, eligible employers may be able to keep the federal employment taxes that would have otherwise been deposited. Please consult with your accountant before you make any changes for further guidance. A fact sheet from the IRS can be found here.

We find that many of our clients are unaware of these policy changes. We are prepared to provide you with guidance on this and the new COBRA policies under President Biden’s American Rescue Plan. If you need assistance understanding how this might impact your company, reach out to us at Experts@FahrenheitAdvisors.com.

 

about the author

Martha YoungbloodAs a Senior HR Consultant, Martha Youngblood brings 20+ years of senior management skill leading human resources for organizations of all sizes. Her signature skills include strategic human resources planning, developing policies and procedures, designing performance and engagement strategies, compensation and talent development. Her strong client communications skills allow her to utilize all of these in a fractional HR role or in a project capacity working directly with the client to achieve specific results.

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