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

On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) to provide needed relief to American households, businesses, cities, states and hospitals.

Many of the details of how the new law will be implemented remain unclear, so it is important to monitor the news and stay abreast of the situation. However, some of the most important relief provided to individuals and small businesses includes:

Economic Impact Payments

  • $1,200 to single Americans with an annual income below $75,000;
  • $2,400 to married couples with a combined annual income below $150,000;
  • $500 to parents for each child under age 17;
  • Reduced payments to individuals and couples with annual incomes more than $75,000 and $150,000 respectively;
  • No payments to individuals earning more than $99,000 annually;
  • No payments to couples earning more than $198,000 annually.

Eligibility is determined from the information that the IRS currently has on file for those who have either filed taxes in 2019 or 2018, or from Forms SSA-1099 or RRB-1099 for those with social security income.

The IRS does not have information regarding any dependents for individuals with social security income, so they will receive $1,200 per person without the additional amount for any dependents at this time.

The IRS urges anyone with a tax filing obligation who has not yet filed a tax return for the past two years, to file as soon as soon as possible in order to receive their economic impact payment. However, economic impact payments will be available until the end of 2020.

People who have previously received a tax refund through direct deposit will receive their money first, possibly within the first 3 weeks. People who received a tax refund through the mail will have a longer wait.

People who have not filed income tax in 2018 or 2019, do not receive social security income, or who moved will face a delay. Additionally, payments may also be delayed because of reduced capacity of the IRS due to the impact of COVID-19.

Immigrants without valid Social Security numbers and “resident alien” status will NOT receive any payment. (Resident alien status means either a Green Card or the ability to prove a “substantial presence”). This excludes people who may have filed taxes under an individual taxpayer identification number rather than a social security number.

In the coming weeks, the Treasury plans to develop a web-based portal so people can provide their banking information to receive payments more quickly.

For more information, go to the IRS website.

Pandemic Unemployment Compensation (PUC)

From now through July 31, 2020, all individuals receiving regular state unemployment benefits and Pandemic Unemployment Assistance (see below) will receive their calculated benefit plus an additional $600 per week in compensation. This includes anyone receiving a partial unemployment payment. Additionally, the traditional waiting week has been waived.

Pandemic Unemployment Compensation will be paid an additional 13 weeks after regular state unemployment benefits expire. Although workers must be “actively engaged” in searching for work, the Act requires states to provide flexibility in meeting such requirement in cases where individuals are unable to search for work because of COVID-19, illness, quarantine, or restriction of movement.

Additionally, Pandemic Unemployment Compensation income will NOT impact Medicaid or CHIP eligibility.

Pandemic Unemployment Assistance (PUA)

Pandemic unemployment assistance provides emergency unemployment assistance to workers who are ineligible for regular  state unemployment, or who have exhausted their state benefits. Workers who are eligible for state unemployment are excluded from this program.

Those eligible for Pandemic Unemployment Assistance include self-employed workers, including independent contractors, freelancers, people seeking part-time work, and those who do not have a long-enough work history to qualify for regular state unemployment benefits.

Applicants will need to provide self-certification that they are (1) partially or fully unemployed, OR (2) unable and unavailable to work because of one of the following circumstances:

  • They have been diagnosed with COVID-19 or have symptoms of it and are seeking diagnosis;
  • A member of their household has been diagnosed with COVID-19;
  • They are providing care for someone diagnosed with COVID-19;
  • They are providing care for a child or other household member who can’t attend school or work because it is closed due to COVID-19;
  • They are quarantined or have been advised by a health care provider to self-quarantine;
  • They were scheduled to start employment and do not have a job or cannot reach their place of employment as a result of a COVID-19 outbreak;
  • They have become the breadwinner for a household because the head of household has died as a direct result of COVID-19;
  • They had to quit their job as a direct result of COVID-19;
  • Their place of employment is closed as a direct result of COVID-19.

Workers are not eligible for Pandemic Unemployment Assistance if they can either work remotely with pay, or are receiving paid sick days or paid leave. Undocumented workers do not qualify.

Amendments to the Families First Coronavirus Response Act (FFCRA)

The CARES Act made several amendments to the recently passed Families First Coronavirus Response Act (FFCRA), such as:

  • Employers may receive tax-credit advances for paid sick and FMLA leave;
  • Employers have the option to pay employees more than the monetary limits in the FFCRA, but additional compensation is not subject to a tax credit;
  • Rehired employees are eligible for paid FMLA leave, so long as the employee was employed for at least 30 of the last 60 calendar days prior to layoff’;
  • Federal agencies can reimburse federal contractors through September 30, 2020 for paid leave (up to 40 hours per week and subject to other limitations) to keep employees or subcontractors “in a ready state” if they cannot perform work or telework due to COVID-19.

Small Business Loans via the Small Business Administration (SBA)

The SBA will provide 100% federally-backed loans to eligible small businesses and 501(c)(3) non-profits with less than 500 employees. These loans will be issued through banks and other lenders and DO NOT require SBA pre-approval.

These ‘Paycheck Protection Loans’ can cover payroll costs, interest costs, rent, and utilities. The loans will equal 2.5 times the monthly payroll costs. The interest rate through the lenders will not exceed 4%.

Loans will be forgiven if the business keeps staff on the payroll between March 1 and June 30. In effect, this makes the loan a general operating grant. Forgivable loans of this type can be taken out for as much as $10 million.

The SBA will administer the program through the states. The SBA’s coronavirus website has the most up to date information available on current loan packages and program information.

Health Insurance

The CARES Act requires that health insurance plans cover the full cost of COVID-19 testing, in addition to requiring testing companies to publish prices on which this benefit will be based. Further, the Act requires health insurance plans to provide full insurance coverage for immunizations or preventive services for COVID-19, which have not yet been developed.

Student Loan Relief

The CARES Act also provides relief to federal student loan borrowers during the COVID-19 national emergency. Federal student loan borrowers only are automatically being placed in an administrative forbearance. This allows borrowers to temporarily stop making monthly student loan payments. This suspension of payments will last until Sept. 30, 2020. However, borrowers can still make payments if they choose.

For more information, visit the U.S. Department of Education Federal Student Loan website.



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New Jersey lawyer turned blogger, podcaster and legal changemaker.