On March 27, 2020, President Trump signed the Coronavirus Aid, Relief and Economic Security (CARES) Act into law. The $2 trillion package provides economic relief to individuals, health care providers, small businesses, and heavily affected sectors of the economy, and is intended to strengthen the federal government and health care system’s response to the COVID-19 pandemic. The bill passed the Senate unanimously on March 25 and passed the House on March 27 with an overwhelming voice vote.
Key economic provisions of the CARES Act include:
Individual Stimulus Payments
Provides a one-time $1,200 payment, which is non-taxable, for individuals ($2,400 for joint taxpayers), plus $500 per child under age 17. The payment phases out for those with adjusted gross incomes of $75,000 or more ($150,000 for joint taxpayers). The rebates would not be counted as taxable income for recipients.
$349 billion in Small Business Interruption Loans
Provides eight weeks of cash-flow assistance, from February 15, 2020 through June 30, 2020 for qualifying businesses (fewer than 500 employees, or the small business size standard associated with that industry, includes franchises, sole-proprietors, and self-employed), available through existing SBA-certified lenders. Allowable uses include costs related to group health care benefits and insurance premiums, and loans amounts are forgiven for amounts paid towards payroll costs, including payment of group health benefits.
$500 billion in Treasury Loans to Severely Stressed Sectors of the Economy
Provides the Treasury Secretary $500 billion to make loans, loan guarantees, and other investments to support heavily affected industries, States, and municipalities for direct or indirect losses as a result of the coronavirus. Details and instructions are expected to be released by the Treasury in the next 10 days.
Unemployment Insurance and Grants
Creates a temporary Pandemic Unemployment Assistance program through December 31, 2020 to provide payment to those not traditionally eligible for unemployment benefits. Provides up to $600/week to each recipient of unemployment insurance or Pandemic Unemployment Assistance for up to four months.
Short-Term Compensation Programs
Provides $100 million in federal grant funding to support short-term compensation arrangements, where employers can reduce employee hours instead of laying off workers and impacted employees will receive a pro-rated unemployment benefit.
Payroll Tax Credit
For qualifying employers whose operations were fully or partially suspended, or whose gross receipts declines by more than 50%, provides a fully refundable payroll tax credit for 50% of wages paid up to $10,000 during the public health emergency.
More Information on the CARES act
- Click here for FAQ's from the Internal Revenue Service (IRS) about how the Families First Coronavirus Response Act (the FFCRA) tax credits apply to small and midsize businesses.
- Click here for more information on the $2 trillion package to provide a jolt to the economy. All Americans would do well to understand the package’s provisions, as it will offer direct relief to businesses and individuals alike.
- Click here for information on the Paycheck Protection Program (“PPP”), which authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. All loan terms will be the same for everyone.
- Click here for the official loan application for the PPP.
- Click here for the DOL's FAQ on the Family First Coronavirus Response Act (FFCRA).
- Click here for DOL Regulations for Families First Coronavirus Response Act
Questions about your coverage? Contact our Employee Benefits Team below or call 717-761-4600 ext 5.