Federal Government Passes CARES Act to Address COVID-19 Crisis
On March 27, 2020, the federal government passed the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act responsive to the current COVID-19 epidemic. The Act affords economic relief to individuals, small businesses, hospitals and public health facilities, food security efforts, state and local governments, and education.
State and Local Governments
The Act designates funding to state and local governments for COVID-19 response programs, as well as direct financial aid for government entities which may run out of cash due to a high number of COVID-19 cases.
Economic Relief for Businesses
The Department of the Treasury can provide forgivable loans and investments to businesses. We expect more information to follow as to the process by which businesses will be able to apply for such loans.
The Act also established a tax credit for businesses that are closed or suffering in order to keep workers on payroll. The credit covers up to fifty percent (50%) of payroll on the first $10,000 of compensation, including health benefits, for each employee.
The Act requires private insurance plans to cover COVID-19 treatments and vaccines, and to make all testing for COVID-19 free of charge.
Economic Payments for Individuals and Families
The Act offers payments to single and married couples as follows:
Individuals with an adjusted gross income of $75,000 or less are entitled to a one-time cash payment of $1,200. For individuals with an adjusted gross income of $75,000 to $99,000, this amount decreases. Individuals with an adjusted gross income greater than $99,000 are not entitled to a payment.
Married couples with an adjusted gross income of $150,000 or less are entitled to a one-time cash payment of $2,400. For married couples with an adjusted gross income of $150,000 to $198,000, this amount decreases. Married couples with an adjusted gross income greater than $198,000 are not entitled to a payment.
Individuals and married couples with children under the age of seventeen (17) years old are entitled to a payment of $500 per child.
The adjusted gross income is based on either 2018 or 2019 tax filings – whichever is most recent.
Under the Act, states may enter into an agreement with the federal government permitting individuals receiving unemployment benefits to receive an additional payment of $600 each week. If such an agreement is reached, it will expire no later than July 31, 2020.
The Act provides additional funding for food banks, the Supplemental Nutrition Assistance Program and the Child Nutrition Program.
The Department of Education will suspend payments due on federal student loans until September 30, 2020. Additionally, employers may provide up to $5,250 in tax-free student loan repayment benefits.
Additionally, students forced to drop out of school as a result of COVID-19 will not have time away from school deducted from lifetime limits on subsidized loan and Pell grant eligibility, and will not be asked to pay back grants or aid they have already received.
Our office is closely monitoring federal and state guidance and legislation for further developments related to COVID-19. If you have any questions, please contact us.
This update is provided for informational purposes only and should not be considered legal advice.