CARES Act of 2020

Updated May 2, 2020

The Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 is a historic economic relief bill created to offset the financial impact of the global coronavirus pandemic of 2020. It passed the House and the Senate, and was signed into law by the President on Friday, March 27, 2020.

After delays, debate, and some political infighting, the Senate passed the bill on Wednesday, March 20, 2020 with the House taking up the bill on Friday, March 27, 2020. The President indicated he would sign the bill, leaving little question as to the fate of the relief package but there are many questions about the contents of the CARES Act and who it benefits.

CARES Act 2020 Basics

The CARES Act is the third portion of three coronavirus relief measures; CARES began as Senate Bill 3548, sponsored by Senate Majority Leader Mitch McConnell of Kentucky (R). This bill included stimulus and economic relief measures worth approximately $1 trillion. It was submitted to the White House for final Presidential approval on March 27, 2020.

The House of Representatives revised the original Senate bill for a total of $2 trillion, including fiscal stimulus payments to American workers that basically work out to $1200 for individuals, $2400 for couples, plus an additional $500 per child where applicable.

The CARES Act, as revised and submitted by the House, is known as House Resolution 748 and includes a lengthy list of benefits, programs, consumer protections, guidelines, and more. The Resolution is aimed at many areas of the American economy including corporate bailouts, consumer stimulus check payments, unemployment benefits, and more. It is broken down into several areas including:

• Title I Keeping American Workers Paid And Employed Act
• Title II Assistance For American Workers, Families, And Businesses
• Title III Supporting America’s Health Care System In The Fight Against The Coronavirus
• Title IV Economic Stabilization And Assistance To Severely Distressed Sectors Of The United States Economy
• Title V Coronavirus Relief Funds
• Title VI Miscellaneous Provisions

What Military Members Can Expect From Coronavirus Stimulus Measures

H.R. 748 includes the following stimulus measures:

• $500 billion for businesses, states, and municipalities
• $349 billion loan program for small businesses
• $130 billion in relief to the medical and hospital industries
• $1,200 to Americans making $75,000 or less. This cap is raised to $150,000 for those who file joint tax returns and $112,500 for head of household). $500 is allowed for each child
• Expanded eligibility for unemployment insurance
• Provides an additional $600 per week on top of state unemployment until July 2020

Details of Title I Keeping American Workers Paid And Employed Act

This act includes, but is not limited to, the following:

• Paycheck protection program
• Entrepreneurial development
• State trade expansion program
• Waiver of matching funds requirement under the women’s business center program
• Loan forgiveness
• Direct appropriations
• Minority business development agency
• Emergency EIDL grants
• Resources and services in languages other than English
• Subsidy for certain loan payments
• Bankruptcy

What Veterans, Service Members, And Military Family Members Need To Know

Much of this section is directed at business owners; veteran-owned small businesses should take note of programs in this bill such as the Paycheck Protection Program could allow qualifying businesses to take out small business loans to handle payroll issues during the coronavirus.

But it could also permit qualifying businesses to have those loans switched to “loan forgiveness equal to the amount spent by the borrower during an 8-week period after the origination date on (i) rent, (ii) payroll costs for workers making less than $100K, (iii) interest on a mortgage, and (iv) utility payments.”

Tax Breaks with Recovery Rebate Checks

The 2020 tax year will feature a tax credit equal to $1,200 for single filers ($2,400 for those filing a joint return).

There is also a tax credit amount calculated by $500 multiplied by the number of qualifying children. Such tax credits will be phased out on a percentage basis (5%) when the taxpayer’s adjusted gross income exceeds the following threshold:

• $150,000 for joint-filers
• $112,500 for heads of household
• $75,000 for all others

Check your status with the official IRS Get My Payment app. SSN, DOB, Street Address and ZIP info required.

Who will get Stimulus Checks First? How are Stimulus Checks Distributed?

• The IRS used direct deposit information from people’s 2018 and 2019 taxes to send out the first wave of payments to more than 80 million Americans, beginning on April 11.
• In late April, the IRS plans to send out a second wave to social security recipients, individuals with disabilities, low-income workers and certain veterans who aren’t typically required to file a tax return and who didn’t file taxes but do get their benefits via direct deposit.
• After that, the IRS will send out paper checks in the mail.
• Payments are going out in reverse adjusted gross income order, meaning they’re being issued to people with the lowest income first.

According the the Washington Post, President Trump’s name will be on the stimulus checks that are set to begin rolling out.

Read more for a complete breakdown on the stimulus checks and who qualifies.

Unemployment Benefits

For workers, the CARES Act provides relief including expanded definitions of those eligible to apply for and receive unemployment benefits. Those who are out of work due to COVID-19 and coronavirus countermeasures (including gig economy workers, freelancers, etc.) AND those who have otherwise used up their unemployment benefits may be eligible for expanded coverage.

Who is specifically excluded from this benefit? Those who can work remotely (“with pay”), those on paid sick leave, and those who receive other paid benefits even if those benefits as paid do not render one ineligible for unemployment coverage. The total extension for unemployment cannot exceed 39 weeks.

The CARES Act creates something called Disaster Unemployment Assistance, designed to provide unemployment benefits for those otherwise unable to qualify for regular unemployment and are unable to work because of the coronavirus emergency.

Those protected under Disaster Unemployment Assistance include:

• Self-employed workers
• Gig workers
• Independent contractors
• Part-time workers
• Applicants with limited work histories

CARES changes (including the increase in “regular” unemployment and the number of weeks available) apply to benefits received through something identified as the Pandemic Unemployment Assistance program, a federally-funded effort administered by individual states operating until Dec. 31, 2020.

Retirement Distributions

“Coronavirus-related distribution” is defined as a distribution “from an eligible retirement plan” made after Jan. 1, 2020 but before Dec. 31, 2020 to somoene who is diagnosed with COVID-19, or cases where a spouse or dependent is diagnosed with COVID-19, OR someone who has “adverse financial consequences as a result of being quarantined, furloughed, laid off, had hours reduced, or other factors as determined by the Secretary of the Treasury during the COVID-19 pandemic.”

These distributions are regulated under the CARES Act including the following guidelines:

Those who take a coronavirus-related distribution are not charged the 10% tax penalty imposed under IRS Code from 1986. Certain conditions may apply. Traditional employer-sponsored retirement plans and IRAs may be excluded from gross income requirements under the CARES Act bailout.

CARES also (temporarily) waives the minimum distribution requirements for deferred compensation plans including (but not limited to) an employer purchased annuity contract), IRAs, and plans maintained by the employer. This waiver is good for distributions made on or after Jan. 1, 2020.

Stimulus Grants for College Students

$14 billion in federal funding was set aside for higher education and $6 billion goes directly to students. Each college is required to use these dollars to provide emergency grants and financial assistance to help students with any expenses they need because of the pandemic. Those expenses can include a wide range of costs, such as health care, child care, food, living expenses or computer equipment. Each college has the discretion to determine which students can access the funding and students should check with their college for details.

Details of Title II Assistance For American Workers, Families, And Businesses

This section includes, but is not limited to, the following:

• Pandemic Unemployment Assistance
• Emergency increase in unemployment compensation benefits
• Temporary full Federal funding of the first week of compensable regular unemployment for States with no waiting week
• Emergency State staffing flexibility
• Pandemic emergency unemployment compensation
• Temporary financing of short-time compensation payments
• Grants for short-time compensation programs
• Waiver of the 7-day waiting period for benefits under the Railroad Unemployment Insurance Act. Enhanced benefits under the Railroad Unemployment Insurance Act
• Extended unemployment benefits under the Railroad Unemployment Insurance Act
• Funding for the DOL Office of Inspector General for oversight of unemployment provisions
• 2020 recovery rebates for individuals
• Special rules for use of retirement funds
• Temporary waiver of required minimum distribution rules for certain retirement plans and accounts
• Allowance of partial above the line deduction for charitable contributions
• Exclusion for certain employer payments of student loans
• Employee retention credit for employers subject to closure due to COVID-19
• Delay of payment of employer payroll taxes
• Modifications for net operating losses
• Modification of limitation on losses for taxpayers other than corporations
• Modification of credit for prior year minimum tax liability of corporations
• Modifications of limitation on business interest
• Temporary exception from excise tax for alcohol used to produce hand sanitizer

Unemployment Compensation Issues

Many are familiar with the provision under Title II of CARES that offers an additional $600 in Federal Pandemic Unemployment Compensation to weekly unemployment benefits. What is not so well known? This benefit is taxable, but is NOT used to calculate eligibility for Medicaid or CHIP.

Another portion of the Act provides an extra 13 weeks of federally-funded unemployment for applicants who have used up state unemployment benefits. This provision expires Dec. 31, 2020.

Health Insurance And Healthcare Industry Considerations

The CARES Act allows group health plans and insurers to cover and reimburse providers of diagnostic testing relating to COVID-19 at rates set prior to the crisis. The Act also mandates speedy coverage for qualifying preventive medicine related to the outbreak. This applies to items, services, vaccinations, etc.

Details Of Title III Supporting America’s Health Care System In The Fight Against The Coronavirus

This section includes, but is not limited to, the following:

• Requiring the strategic national stockpile to include certain types of medical supplies
• Treatment of respiratory protective devices as covered counter-measures
• Prioritize reviews of drug applications; incentives
• Additional manufacturer reporting requirements in response to drug shortages
• Discontinuance or interruption in the production of medical devices
• Coverage of diagnostic testing for COVID-19
• Pricing of diagnostic testing
• Rapid coverage of preventive services and vaccines for coronavirus
• Limitation on liability for volunteer health care professionals during COVID-19 emergency response
• Flexibility for members of National Health Service Corps during emergency period
• Importance of the blood supply
• Priority zoonotic animal drugs
• Reauthorization of health professions workforce programs
• Health workforce coordination
• Campus-based aid waivers
• Use of supplemental educational opportunity grants for emergency aid
• Federal work-study during a qualifying emergency
• Adjustment of subsidized loan usage limits
• Exclusion from Federal Pell Grant duration limit
• Institutional refunds and Federal student loan flexibility
• Satisfactory academic progress
• Continuing education at affected foreign institutions
• National emergency educational waivers
• Temporary relief for federal student loan borrowers
• Provisions related to the Corporation for National and Community Service
• Workforce response activities
• Limitation on paid leave
• Emergency Paid Sick Leave Act Limitation
• Unemployment insurance
• OMB Waiver of Paid Family and Paid Sick Leave
• Paid leave for rehired employees
• Advance refunding of credits
• Expansion of DOL Authority to postpone certain deadlines
• Single-employer plan funding rules
• Federal contractor authority
• Inclusion of certain over-the-counter medical products as qualified medical expenses
• Increasing Medicare telehealth flexibilities during emergency period
• Enhancing Medicare telehealth services for Federally qualified health centers and rural health clinics during emergency period
• Temporary waiver of requirement for face-to-face visits between home dialysis patients and physicians
• Use of telehealth to conduct face-to-face encounter prior to recertification of eligibility for hospice care during emergency period
• Encouraging use of telecommunications systems for home health services furnished during emergency period
• Improving care planning for Medicare home health services
• Adjustment of sequestration
• Medicare hospital inpatient prospective payment system add-on payment for COVID–19 patients during emergency period
• Increasing access to post-acute care during emergency period
• Coverage of the COVID-19 vaccine under part B of the Medicare program without any cost-sharing
• Requiring Medicare prescription drug plans and MA–PD plans to allow during the COVID-19 emergency period for fills and re-fills of covered part D drugs for up to a 3-month supply
• Clarification regarding uninsured individuals
• Clarification regarding coverage of COVID-19 testing products
• Expansion of the Medicare hospital accelerated payment program during the COVID-19 public health emergency

This portion of the CARES Act provides a variety of relief and other measures aimed at the healthcare sector, patients, and insurers.

Health Insurance And Healthcare Industry Considerations

The CARES Act allows group health plans and insurers to cover and reimburse providers of diagnostic testing relating to COVID-19 at rates set prior to the crisis. The Act also mandates speedy coverage for qualifying preventive medicine related to the outbreak. This applies to items, services, vaccinations, etc.

One provision allows patients to use Health Savings Accounts (HSAs) and Flexible Spending Accounts for the purchase of  over-the-counter medical products (including those needed for quarantine) without a prescription.

Under pre-CARES Act guidelines, contributions are permitted to HSAs while they are covered by a high deductible health plan. The CARES Act allows a high deductible health plan to provide telehealth and remote care services with no deductible until 2021.

Considerations For The Uninsured

One section of the CARES Act provides COVID-19 testing and “related services” with no cost-sharing required in state Medicaid programs that choose to provide this enrollment option. Another section addressing these issues includes a measure to prevent scheduled reductions  in Medicare payments for diagnostic laboratory tests in 2021.

Medicare Considerations

Another section permits physicians assistants and nurse practitioners to order Medicare Home Health services; prior to the CARES Act, only physicians were permitted to do this. The CARES Act changes help save time in the process of obtaining home health services.

CARES provisions permit up to three months of prescription refills for “covered Medicare Part D drugs” during the outbreak emergency.

Another change in Medicare is the extension of an existing Medicare accelerated payment program designed to help rural and “frontier area” hospitals maintain stable cash flow to stay open during the coronavirus outbreak. Medical facilities that qualify could be eligible for as much as six months of advanced payments (based on unreimbursed bills or unbilled discharges).

Other Considerations

Another effect of the passage of the CARES Act is the extension of the TANF program (as well as “related programs”. TANF, which stands for Temporary Assistance for Needy Families program runs on the extended schedule until Nov. 30, 2020.

There is also an expansion of a Medicaid program; the Community Mental Health Services program that coordinates mental health and substance abuse care is now available in more states, and runs until November  30, 2020.

Private-sector employers may apply for advance payment of tax credits to allow up to 12 weeks of paid leave (for coronavirus-related circumstances) to the employee.

Details Of Title IV Economic Stabilization And Assistance To Severely Distressed Sectors Of The United States Economy

This section includes, but is not limited to, the following:

• Emergency relief and taxpayer protections
• Limitation on certain employee compensation
• Continuation of certain air service
• Debt guarantee authority
• Temporary Government in the Sunshine Act relief
• Temporary hiring flexibility
• Temporary lending limit waiver
• Temporary relief for community banks
• Temporary relief from troubled debt restructurings
• Optional temporary relief from current expected credit losses
• Non-applicability of restrictions on ESF during national emergency
• Temporary credit union provisions
• Increasing access to materials necessary for national security and pandemic recovery
• Special Inspector General for Pandemic Recovery
• Conflicts of interest
• Congressional Oversight Commission
• Credit protection during COVID–19
• Foreclosure moratorium and consumer right to request forbearance
• Forbearance of residential mortgage loan payments for multifamily properties with federally backed loans.
• Temporary moratorium on eviction filings

Details Of Title V Coronavirus Relief Funds

This section contains a single feature, definition of the Coronavirus Relief Fund, which is identified as a $150 billion war chest made available to states “for necessary expenditures incurred in responding to the coronavirus outbreak” including the construction of field hospitals, purchasing essential equipment such as respirators, and to offset the cost of offering essential services. These funds are available for expenses incurred between March 1, 2020 and Dec. 31, 2020.

Details Of Title VI Miscellaneous Provisions

This section contains the following:

• COVID–19 borrowing authority for the United States Postal Service
• Emergency designation

VA Loan Forbearance

The CARES Act provides multiple protections on your VA-guaranteed loan if you experience financial hardship directly or indirectly caused by the COVID-19 emergency, regardless of your loan’s default status.  These protections include:

• A defined forbearance period of up to 180 days, with the possibility for extending it for another 180 days
• A foreclosure and eviction moratorium for 60 days starting March 18, 2020
• Instructions on how mortgage servicers are to report to the credit agencies. For example, borrowers who have requested the COVID-19 Forbearance option are not considered to be delinquent for purposes of credit reporting.

Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News