What is the American Rescue Plan – Overview
The American Rescue Plan Act, 2021 is a rescue package. It is meant to ease the recovery from the devastating effects of the COVID-19 pandemic.
The US$ 1.9 trillion packages is one of the most expensive economic rescue acts passed in the history of the US government.
The American Rescue Plan (ARP) has direct stimulus payments of US$ 1,400. It also includes extending unemployment compensation and foreclosure moratoriums.
Apart from this, the ARP also eases continuing evictions and rising Child Tax Credit by making it completely refundable.
The ARP also provides monetary assistance to local and state administrations.
This financial aid is directed towards compensating for lost tax revenues, facilitating the safe opening of schools, and subsidizing COVID-19 testing and vaccination initiatives.
8 Benefits under the American Rescue Plan of 2021
The ARP stimulus package of 2021 is the biggest economic and health rescue program even launched in the entire US history.
This act was launched to complement the CARES Act 2020 (worth US$ 2 trillion) and the Consolidated Appropriations Act 2021 (worth US$ 900 billion).
The ARP extends several aspects of these two programs and also creates new strategies for recovery.
Let’s take a look at the specific benefits outlined under the American Rescue Plan 2021:
1 – Direct payments
The ARP program offers US$ 1,400 as direct stimulus payments. This is meant for people who earn up to US$ 75,000 a year. This is an addition to the US$ 600 payment plan included in the second stimulus package.
This benefit is for those whose adjustable gross income (AGI) is US$ 75,000 or less per year.
Couples with a combined AGI of less than US$ 150,000 per year are also eligible to receive the full amount. The act also includes all dependents of benefitting individuals within it.
In case your annual income grows over US$ 75,000 per year, you will continue to receive this stimulus package until it reaches US$ 80,000 per year (or US$ 160,000 for couples).
Under this direct financial aid program, eligible individuals can receive US$ 300 every week.
2 – Unemployment benefits
The Pandemic Unemployment Assistant (PAU) program is extended by the ARP 2021. The duration of aid is extended from the previous 50 weeks to 79 weeks, as of September 2021.
The US$ 300 as benefits under the Federal Pandemic Unemployment Compensation (FPUC) has also been extended after September 2021.
Additionally, the initial US$ 10,200 in 2020 benefits are tax-free for families who earn less than US$ 150,000 per year.
The Act also facilitates the continuation of 100% subsidy for COBRA health insurance holders.
3 – Moratoriums and financial assistance
The ARP does not extend the tenure of current foreclosure and eviction moratoriums which conclude on 31st March 2021.
However, the ARP will provide additional funding to those lagging on mortgage payments, rent, and utility bills.
Under this legislation, some of the major provisions include:
- US$ 21.55 billion towards emergency rental assistance (up to 30th September 2022)
- US$ 5 billion in emergency housing vouchers (up to 30th September 2022)
- US$ 100 billion towards tribal housing improvements
- US$ 100 billion towards rural housing development (up to 30th September 2022)
- US$ 5 billion towards assisting the homeless
4 – Food aid
The ARP legislation continues the 15% rise in Supplemental Nutrition Assistance Program (SNAP) even after September 2021.
It offers US$ 1.15 billion to state administrations under the SNAP initiative.
In addition, it also offers US$ 1 billion for nutrition assistance programs being run in the United States. The act also commits US$ 490 million to the USDA.
This fund is meant to increase the volume of cash vouchers under the WIC program.
Besides this, the ARP also allocates US$ 390 million to enhance participation in WIC up till 30th September 2024.
The ARP provides reimbursement to emergency shelters through the National School Lunch Program for meals offered to people less than 25 years old.
5 – Child Tax Credit
The ARP 2021 has increased the Child Tax Credit (CTC) limit to US$ 3,000 per year for every child aged between 6 and 17 years. Every child under the age of 6 receives US$ 3,600.
Couples who make less than US$ 150,000 annually and single parents who make less than US$ 112,500 per year will also receive these benefits.
The payment for this is deposited directly every month in the beneficiary’s designated bank account.
A family with a single child under 6 years will receive US$ 300 monthly. Alternatively, families with children between 6 and 17 years will receive US$ 250 monthly per child.
The new legislation offers one year of credit payments too. This is aimed at helping families to pay ongoing costs without going into debt.
6 – Student loan forgiveness taxes
The ARP does not involve student loan forgiveness. However, it offers tax-free payments to students who passed between 30th December 2020 and 1st January 2026. Usually, loan forgiveness comes under taxable income.
7 – Business aid
The ARP includes the Restaurant Revitalization Fund. This new program allocates US$ 28.6 billion for restaurants and bars under the pandemic assistance grants.
Companies can get up to US$ 10 million with a US$ 5 million limit for physical locations. This amount can be used to cover the cost of utilities, payrolls, rent and other expenses.
The ARP also extends the Paycheck Protection Program (PPP) by adding US$ 7.25 billion to the original fund amount.
The ARP also includes larger numbers of non-profit organizations that are allowed loan forgiveness. The deadline for the PPP program was also extended to 31st May 2021.
8 – Pandemic response
The ARP 2021 allocates US$ 50 billion towards COVID-19 contact tracing and testing. An additional US$ 7.66 billion is meant to extend the size of the current public healthcare workforce.
Besides this, around US$ 16 billion has been set aside to fund supply chains in vaccine distribution.
Additionally, the ARP 2021 also provides US$ 47.8 billion to grow federal, state and local testing and enhance tracing abilities by setting up mobile testing units.
Another US$ 14 billion is aimed to speed up the distribution and administration of COVID-19 vaccines across the United States.
The American Rescue Plan has been pivotal in providing extensive aid and benefit to individuals, organizations, corporations and schools.
The increased funding amount will enable improved and faster rehabilitation for those affected economically by the COVID-19 pandemic in the US.