On March 27, 2020, the White House and Congress came to an agreement and passed the largest relief package in recent United States history, called the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Spreading $2 trillion amongst businesses, hospitals, families and individuals, this economic stimulus package is designed to bring relief to those experiencing the ever-increasing threat of economic turmoil and downturn amidst the COVID-19 pandemic.
This relief package greatly surpasses the $168 billion offered to Americans in the Economic Stimulus Act of 2008, which was the last time an economic stimulus package was passed.1
If you’re wondering how this newly passed act may affect you, your place of employment or your local healthcare facility, we’ve gathered up the important numbers to know in this overview.
In an effort to extend unemployment benefits, eligible Americans on unemployment will receive an additional $600 per week for four months.2 This is done in an effort to help those who are currently out of work due to the COVID-19 pandemic better achieve their full pay over the next four months.
This bill will allow unemployed individuals affected by the pandemic to receive unemployment insurance for an extended 13 weeks. In addition, it will allow out-of-work individuals to receive the enhanced unemployment benefits as outlined in this bill for four months.2
The bill has called for the creation of a pandemic unemployment assistant program that would offer unemployment benefits to those who have previously not been eligible - including those who have been furloughed by their employer, freelancers and gig workers (such as Uber or Lyft drivers).
In the final iteration of the bill, hospitals will receive around $117 billion in aid.2 In regards to helping healthcare workers on the frontline of the COVID-19 pandemic, the bill is meant to help workers gain better access to protective equipment, testing supplies and provide construction or facilities to house the growing number of patients in need.
Additionally, hospitals and healthcare providers will see a 20 percent increase in Medicare payments for treating those on Medicare with coronavirus.2
Some American taxpayers will be receiving direct stimulus payments of $1,200 as part of the new bill. Those with incomes up to $75,000 will receive the full $1,200, with the amount lowering and eventually phasing out for those who earn more than $99,000. Individuals earning $99,000 or couples earning $198,000 or more will not receive checks. Families who qualify with children can expect to receive an additional $500 in direct payments per child.2
To determine how much you will receive, the government will be basing your income level on your 2018 tax return, unless you have already filed your 2019 tax return.2 As a reminder, the tax filing deadline has been extended to July 15, 2020.2
Small Business Grants & Loans
A large portion of this stimulus bill will be going toward assisting small businesses who have been affected greatly by the COVID-19 pandemic. Overall, $500 billion will go toward assisting businesses and corporations, with $29 billion going to the aviation industry and $17 billion to businesses that work in national security. The remaining $454 billion can be leveraged as loans for other businesses or municipalities. Companies that choose to take this government assistance must agree to stop any stock buybacks for the length of the loan plus a year. In addition, these companies must retain at least 90 percent of their employee levels between March 24 and September 30, 2020.2
This money will be overseen by an inspector general and a five-person panel, who Congress will appoint. In addition, any businesses run or partially run (at least 20 percent stake in the company) by the Trump family, or other senior government officials, will not be eligible to use these funds.2
Required Minimum Distributions (RMD's)
Required minimum distributions (RMD's) for traditional IRA's and inherited IRA's are suspended for 2020. If you have already taken a distribution you have three options :
- Keep the distribution and pay the necessary taxes
- Return the distribution within 60 days to the appropriate account
- Use the distribution as part of a Roth IRA conversion
While the news seems to be changing every day surrounding COVID-19 in America, this stimulus act is coming at a time when families and business owners alike are fearful of their financial future. If you still have questions about how this stimulus package may affect you or your business, you can get in touch with us via , or our website!