The U.S. House of Representatives passed the Build Back Better Act (BBBA) on November 19, 2021, a sweeping legislation that could significantly bolster employee protections and benefits.
While the Act is far from being passed, some of its provisions are generating buzz for both employers and employees. Backers of the legislation hope that by addressing many workers’ pain points, more people can get back to work with fewer hurdles.
Affordable Care Act (ACA) Amendments. The ACA’s affordability threshold is the maximum amount of an employee’s income that must be paid for individual coverage under the lowest cost employer-sponsored health option under the ACA. This applies to employers that have at least 50 full-time employees (including full-time equivalent employees). The BBBA would lower the affordability threshold from 9.61% for 2022 to 8.5% (for the 2022–2025 tax years). This change may have a significant impact on companies that employ large numbers of low-wage employees.
Universal Preschool and Childcare Tax Credits. The BBBA would expand parents’ access to “high-quality” preschools for three- and four-year-old children. Tax credits would limit childcare costs to little or nothing for those earning less than $72,000 a year, perhaps only costing about $1,000 a year for families earning up to their state median income. It would also purportedly limit childcare costs to no more than 7% of income for families earning up to $300,000 a year. Under the bill as proposed, parents must be working, seeking work, in training or suffering a serious health issue.
These programs, taken together, would theoretically make it more economically feasible for more people to work. The drafters hope these tax credits will help ease the labor shortage that many industries are experiencing.
While it’s difficult to say if the BBBA will ultimately pass, MarathonHR will continue to follow its developments so that we can keep you informed.