Federal Updates COVID-19 Briefing Memo—CARES Act Overview

April 2, 2020

Coronavirus Aid, Relief, and Economic Security (CARES) Act Overview: 

• The $2 trillion economic relief plan was signed into law by President Trump on Friday, March 27th.
• Its components include stimulus payments to individuals, expanded unemployment coverage, student loan changes, different retirement account rules and more.
• The bill provides federal aid to states, including nearly $5 million to Pennsylvania, in order to meet virus related costs over the next year.

Stimulus Payments: 

• Under this legislation, eligible adults would receive a one-time payment of up to $1,200, and an additional $500 for every child in their household under 16.
  • Single adults with an income of $75,000 or less will get the full amount.
  • Married couples with no children earning $150,000 or less will receive a total of $2,400.
  • Taxpayers filing as head of household will get the full payment if they earned $112,500 or less.
• Adults who are over 16, but still claimed as dependents, are not eligible for stimulus checks.
• Individuals receiving social security retirement, SSDI, or individuals who are unemployed are still eligible for payments.
• Unfortunately, individuals are only eligible for this payment if they have a valid social security number.
• The Treasury Department announced on April 1st that individuals who receive Social Security will no longer be required to file a tax return in order to receive a stimulus check; they will receive one automatically.
• Immigrants with social security numbers who meet the eligibility thresholds will receive the same cash payments as everyone else. However, undocument individuals who are not authorized to work, will not receive those payments, even if they pay taxes.
• Additionally, a family won’t be eligible if one parent is undocumented—meaning they have an Individual Taxpayer Identification Number. This includes the payment for children under 16 who are citizens.

Expanded Unemployment Benefits: 

• This legislation expands unemployment benefits (known as Pandemic Unemployment Assistance – PUA) as a result of the crisis. Eligible workers will get an extra $600 per week on top of their state benefit, and benefits will be provided for an additional 13 weeks on top of state benefits.
• Individuals cannot obtain combined state and PUA benefits for more than 39 weeks, and the extra $600 a week will end July 31st.
• The legislation also expands benefits to include the following populations:
  • Individuals who are self-employed
  • Individuals who work part-time
  • Individuals unable to find work due to quarantine
  • Individuals who have received a COVID-19 diagnosis, or are caring for a household member who has received one, and are unable to work as a result
  • Individuals who rely on a school, a day care or another facility to care for a household member so that they can work
  • Individuals who are unable to work because their employer is closed during the crisis
• For self-employed individuals, the benefit amount will be based on previous income, using a formula from the Disaster Unemployment Assistance program.
• Individuals who are already receiving unemployment benefits are also eligible for expanded benefits
• Additionally, the one-week wait time necessary to apply for unemployment benefits, as well as the work search and work registration requirement has been waived in Pennsylvania until further notice.
• PUA only applies to individuals who are authorized to work in the United States. Individuals who are undocumented or have temporary visas, could lose their legal status if they aren’t employed. Right now, an H-1B visa holder has 60 days to find a new job if they are out of work and can receive unemployment benefits for that amount of time.
• For immigrants that are documented and authorized to work, the unemployment benefits will apply and will not be counted toward any public charge determinations.

Student Loan Payments: 

• Previous legislation waived two months of loan payments, and interest on federal loans.
• This legislation suspends loan payments on federal loans until September 30th.
• Only direct loans from the federal government taken out in the last 10 years are eligible.

Retirement Account: 

• For the calendar year 2020, no one will have to take a required minimum distribution from any individual retirement accounts or workplace retirement savings plans, like a 401(k)
• Individuals can withdraw from your IRA or workplace account up to $100,000 this year without the usual 10% penalty, as long as it’s because of the outbreak.
• Individuals only qualify for this exception if they have tested positive for COVID-19.
• This legislation also allows individuals to take out twice the usual amount from their 401(k)s.

Small Business Aid: 

• The bill includes $370 billion for small businesses, and allows banks to lend directly to businesses, backed by the Small Business Administration (SBA).
• Businesses would not have to repay loan money that was spent on paying employees, a mortgage, rent or utilities.
• Additionally, business owners won’t have to provide personal guarantees or use available assets as collateral. There are no fees, and interest rates are capped at 4%.
• Loans are limited to $10 million, to businesses with 500 employees or less, and loans covering salaries of over $100,000 a year wouldn’t qualify for forgiveness.
• This portion of the legislation is retroactive to February 15th, 2020 to help bring workers who may have already been laid off back onto payrolls.

Healthcare: 

• The legislation appropriated $100 billion for hospitals to treat COVID-19, and $1.32 billion in immediate additional funding for community centers.
• The bill, however, does not have any provisions to expand coverage or pay for COVID-19 related treatment for uninsured individuals.
• Shortcomings: 
• It lacks an emergency fund. An emergency fund could provide families with children and others with cash assistance to meet their basic needs and other forms of crisis assistance.
• It lacks provisions to extend certain economic-relief provisions if economic conditions warrant. For example, its broad eligibility expansions for unemployment benefits expire December 31, and its unemployment benefit increase expires July 30.