Tags: CARES Act, COVID-19Phase III – Federal Legislation Addressing COVID-19
Last Updated 3/27/20 (12:35 p.m.)
Congress created a three-phase approach to address coronavirus. Each phase has passed and is in process of being implemented. This document provides a newsletter summary and a more extensive summary of Phase III.
Summary (Extensive Summary Below)
Congress Passed Massive Economic Stimulus Bill
Congress passed H.R. 748, Coronavirus Aid, Relief, and Economic Security (CARES) Act. This legislation is the last in a trio of bills addressing the coronavirus. The CARES Act primarily addresses economic impacts of COVID-19, providing $2 trillion in stimulus money to support small businesses, large industries and individual taxpayers.
Utah will receive a minimum of $1.25 billion to help address impacts of COVID-19. Individuals and couples in certain income brackets will receive payouts to help with immediate needs. The CARES Act will also provide low-interest loans to help businesses recover, and will help protect many families in financial distress from being evicted from their homes. The bill provides incentives for businesses retaining employees and rehiring furloughed workers. A more extensive summary can be found here.
Here are a few highlights of the CARES Act:
Small and Large Businesses
Provides $349 billion in guaranteed loans to small businesses for covering expenses, including payroll
Provides $10 billion for disaster relief loans and expands the program to include self-employed individuals
Provides a refundable tax credit for payment of wages
Triples the maximum loan that can be offered under certain SBA programs
Allocates $454 billion to support financial systems that lend to businesses, states or municipalities
Provides $29 billion to guarantee loans and support other investments for air carriers
Individual Taxpayers
Provides direct payments to qualifying citizens: $1,200 for each individual earning less than $75,000 or $2,400 for couples earning less than $150,000. In these same income brackets, parents will receive $500 for each child
Workforce Benefits
Increases unemployment benefits by $600 per week (if state requests)
Provides unemployment benefits to employees who are self-employed or ineligible through other programs
Healthcare
Appropriates $10 billion for hospitals and health care providers
Provides $45 billion to the Centers for Disease Control
Housing
For a limited time, prohibits foreclosures, allows forbearances and prohibits initiating legal action to evict a tenant for those holding mortgages backed by the federal government
Provides $11.25 billion for public housing agencies, homeless assistance grants, the Community Development Fund and project-based rental assistance
Emergency Powers and Disaster Relief
Appropriates $1 billion for use under the Defense Production Act, which allows the President of the United States to compel the production of certain goods
Appropriates $45 billion to the national Disaster Relief Fund
Provides up to $16 billion for the Strategic National Stockpile
Additional Provisions
Provides Utah a minimum of $1.25 billion for expenses incurred due to COVID-19
Provides $25 billion for transit infrastructure grants
Provides $34.1 billion for agriculture producers, SNAP and children’s nutrition programs
Suspends certain federal student loan payments for six months
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Extensive Summary
H.R. 748 – Coronavirus Aid, Relief, and Economic Security (CARES) Act
H.R. 748, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, is the last in a trio of bills Congress passed to address the coronavirus outbreak. The legislation primarily addresses the economic impacts of COVID-19. The bill provides $2 trillion in stimulus money to support small businesses, large industries and individual taxpayers, including the following provisions:
Small Businesses
Small Business Loans – The CARES Act provides $349 billion in guaranteed loans to small businesses to cover expenses, including payroll.
Aiming to keep people employed, the loans are forgivable to the extent the funds are used to pay employee wages.
The bill also provides incentives for a business to rehire furloughed workers.
Small Business Economic Disaster Loans – The bill provides $10 billion for Economic Injury Disaster Loans of up to $10,000 each for small businesses.
The program is temporarily expanded to include independent contractors, cooperatives, sole proprietorships and others.
If requested by an applicant, the Small Business Administration is required to disburse loan advances to the applicant within 3 days of application completion (while the loan is still being processed).
Employee Retention Tax Credit – The CARES Act establishes the Employee Retention Tax Credit:
The program provides a refundable Social Security tax credit tied to an employer’s payment of employee wages.
Under the program, all eligible employers may claim a 50 percent credit for paid wages—up to $10,000 per employee.
The credit is available to an employer whose:
operations were fully or partially suspended due to a COVID-19-related shut-down order; or
gross receipts declined by more than 50 percent compared to the same quarter last year.
Increased Size of SBA Loans – The bill increases the maximum loan under the Small Business Administration Express program from $350,000 to $1 million. The provision is effective through the end of the year.
Tax Deferment – The bill allows an employer or self-employed individual to defer payment of their 6.2 percent share of the Social Security tax. The deferment would require payment by the end of 2022.
Other Businesses and Market Liquidity
Guaranteed Loans through Federal Reserve – The CARES Act allocates $454 billion for loans, loan guarantees and “other investments.”
Through financial systems established by the Federal Reserve, it provides liquidity to financial systems and funds loans for larger businesses, states and municipalities.
The bill provides little guidance on the distribution of these funds, but requires the US Department of the Treasury to create a process for distributing funds to industries in need.
Airline Industry – Provides $25 billion for passenger air carriers and $4 billion for cargo air carriers for loans, loan guarantees and “other investments.”
Businesses Critical to National Security – Provides $17 billion for businesses deemed critical to national security.
Moneymarket Guarantee – The bill authorizes the Department of the Treasury to temporarily guarantee money market funds.
Limits on Paid Leave – Establishes a $200/day or $10,000/aggregate limit on requirements for employers to provide paid leave for an employee.
Controls
Inspector General – The CARES Act creates a new position and office for a Special Inspector General for Pandemic Recovery, which will oversee and audit loan, grant and other programs established by the bill.
Individual Taxpayers
Payouts – Individuals earning less than $75,000 will receive $1,200 plus $500 for each child. Couples earning less than $150,000 will receive $2,400 plus $500 for each child. For those making more than that amount, the payout phases out for individuals making up to $99,000 and couples making up to $198,000.
Waives Retirement Penalties – The CARES Act waives the 10 percent early withdrawal penalty for withdrawals up to $100,000 from certain retirement accounts for reasons related to COVID-19.
Healthcare
Funding for Hospitals and Providers – The bill appropriates $10 billion for disbursement to hospitals and health care providers incurring costs related to addressing COVID-19.
COVID-19 Testing Coverage – The CARES Act expands related provisions already enacted by Congress to ensure COVID-19 diagnostic tests are covered free of charge, regardless of the type of insurance an individual has. It also requires health insurance plans to cover costs of evidence-based preventative services and vaccines.
COVID-19 Funding – The bill provides the following additional funds for the prevention, diagnosis and treatment of COVID-19:
$1.3 billion in grants for health providers in medically underserved areas;
$45 billion to the Centers for Disease Control, $1.5 billion of which must be passed to state and local governments for preparedness and response activities;
$27 billion for public health and social services emergency funds including:
up to $16 billion for the Strategic National Stockpile; and
$3.5 billion for vaccines and pharmaceuticals.
Liability of Volunteers – The bill limits liability for healthcare professionals who volunteer time to provide care during a public health emergency.
Workforce Benefits
Unemployment Benefits – The CARES Act expands unemployment benefits by allowing individuals to receive an additional $600 in unemployment insurance per week. A state must request this funding.
Individuals Not Qualified for UI – The bill creates the Pandemic Unemployment Assistance Program, which provides payment to those not traditionally eligible for unemployment benefits, including those who are self-employed, are independent contractors, have limited work history or are unable to work as a direct result of COVID-19.
Coverage for Fast-Tracked Benefits – If a state chooses to fund the first week of unemployment benefits without a one-week waiting period, the federal government will temporarily fund these costs.
Agriculture, Food, and Drug
Prioritizes FDA Drugs – The CARES Act prioritizes the Food and Drug Administration’s review of drugs expected to be in shortage.
Funding – The bill provides the following funding:
$9.5 billion for agricultural producers impacted by the coronavirus, to be used for emergency purposes;
$8.8 billion for children’s nutritional programs; and
$15.8 billion for the Supplemental Nutrition Assistance Program (SNAP).
Housing
Delayed Action for Non-Payment – For mortgages backed by the federal government (including those backed by Fannie Mae or Freddie Mac), the bill:
prohibits foreclosures for the next 60 days;
provides that an individual can receive 180 days of payment forbearance; and
provides that a landlord cannot charge a penalty or initiate legal action to evict a tenant.
Funding – The bill provides the following funding:
$1.25 billion for public housing agencies;
$4 billion for homeless assistance grants;
$5 billion for the Community Development Fund within the Department of Housing and Urban Development; and
$1 billion for project-based rental assistance.
Education
Student Loan Payment Suspension – The CARES Act suspends certain federal student loan payments for six months.
The bill also appropriates $30.7 billion for the Department of Education.
Emergency Powers and Disaster Relief
Defense Production Act – The CARES Act appropriates $1 billion for use under the Defense Production Act, which allows the President of the United States to compel the production of certain goods.
The bill also appropriates $45 billion to the national Disaster Relief Fund.
Additional Provisions
Direct Payment to State and Local Governments – The CARES Act allocates to Utah a minimum of $1.25 billion from a pool of $150 billion. The funds are required to be used for expenses unavoidably incurred due to COVID-19. Amounts will be disbursed within 30 days of enactment.
Charitable Organizations – The bill provides incentives to contribute to charitable organizations, allowing individuals up to a $300 charitable contribution tax deduction, whether or not they itemize on their tax form.
Additional Funding – The bill provides the following additional funding:
$3.5 billion for child care, to be passed to state governments for assisting low-income families;
$10 billion for airports to address coronavirus-related issues; and
$25 billion for transit infrastructure grants.
Phase III – Federal Legislation Addressing COVID-19
March 30, 2020