Ask WREN: What is the American Rescue Plan?
by Chloe Holowczenko, WREN Policy and Programs Assistant on Mar 23, 2021
When creating policies designed to address pandemic relief, women, especially women of color, need to be prioritized. Women are disproportionally impacted by the coronavirus pandemic and women of color have been hit the hardest. More than 2.3 million women have dropped out of the labor force since February 2020.
If women continue to remain out of the workforce at the same levels as last spring for a year, it will cost the country $64.5 billion. A Census Bureau and Federal Reserve analysis found that 1 in 3 women not working in July cited childcare issues as the reason, and Pew found that mothers of children 12 and under were three times more likely than fathers to have lost work between February and August. Latina and Black women have been hit hardest, and women’s labor-force participation reached a 33-year low in January. Economists have dubbed this recession a “shecession.”
The American Rescue Plan Act of 2021 addresses some of the key policies that women and their families need to come out of the pandemic stronger.
What is it?
The $1.9 trillion COVID-19 relief package is a historic package for many reasons, but WREN reveres it because it does so much to target help where it is most needed.
This comprehensive package includes vital emergency programs that our families, hospitals, small businesses, and local economies need right now, including: an extension of unemployment benefits; a childcare stabilization fund; direct payments, including for some mixed status families; critical expansions of the Earned Income Tax Credit and Child Tax Credit; aid to state, local, territory, and tribal governments; funding to support a scaled-up and equitable distribution of the COVID-19 vaccine; protections from evictions and utility shut-offs; and increased funds for SNAP, school meals, and other nutrition programs that are in unprecedented demand.
While there are many components to the policy we want to highlight:
Paid Family and Medical Leave-
In March 2020, the federal government enacted landmark emergency COVID-19 paid leave provisions through the Families First Coronavirus Response Act (FFCRA). These provisions gave most private-sector employees whose employers have fewer than 500 employees, along with government employees, the right to paid, job-protected leave for a range of COVID-19 related needs. Recognizing this emergency situation, paid leave under the FFCRA was 100% paid for by the federal government through tax credits to employers (except government employers); self-employed people experiencing the same needs could also claim tax credits. The FFCRA offered an invaluable lifeline to workers across the country. Unfortunately, the FFCRA provisions were temporary, ending on December 31, 2020. In December 2020, Congress extended the existing tax credits (for both employers and self-employed people) through March 31, 2021, but did not extend employees’ rights to take paid leave from work under the law. Resources from our partners at A Better Balance:
- A “what happened” fact sheet highlighting the key takeaways on paid leave from the American Rescue Plan
- An explanation of the new and expanded voluntary paid leave tax credits
- FAQs on the new federal employee emergency paid leave rights
- An update to our guide to tax credits on emergency paid leave for self-employed workers
Medicaid– The bill would make several changes to Medicaid financing and eligibility rules to increase access to coverage.
- POSTPARTUM COVERAGE– The bill would give states, for five years, the option to extend Medicaid and Children’s Health Insurance Program (CHIP) eligibility to pregnant individuals for 12 months postpartum. States choosing this option must provide the full Medicaid benefit for pregnant and postpartum individuals during the 12-month postpartum period.
- EXPANSION INCENTIVE– The bill would provide an incentive for states that have not already done so to expand Medicaid by temporarily increasing the state’s Federal Medical Assistance Percentage (FMAP) for their base program by 5 percentage points for two years. The FMAP increase would be available at any point after enactment and would begin in the first calendar quarter when a new expansion state incurs spending for people in the Medicaid adult expansion groups. If a state expands during the PHE, that state will receive both the COVID-related 6.2 percentage point FMAP and the new 5-percentage-point increase. The increased match does not apply to the already-enhanced matching rate for expansion populations, to federal matching rates for Medicaid Disproportionate Share Hospital (DSH) payments or CHIP. States choosing to expand would be required to maintain coverage levels to access the FMAP increase, including the newly established requirement to cover COVID-19 vaccine and treatment.
- Child Care Provisions– The bill includes several provisions to increase access to childcare, including an additional $15 billion through September 30, 2021, for the Child Care and Development Block Grant that could be used specifically for health care and other front-line workers, regardless of income.
- Tax Credits– The package would make the full Child Tax Credit available to 27 million children in families with low or no income, increase the size of the Child Tax Credit, and provide an expanded Earned Income Tax Credit (EITC) for far more low-paid adults without minor children at home — driving a historic reduction in child poverty and providing timely income support for millions of people.