After days of intense back-and-forth negotiations, the U.S. Senate passed the emergency relief stimulus package dubbed the Coronavirus Aid, Relief and Economic Security (CARES) Act on Wednesday night.
The CARES Act aims to ease financial concerns for small businesses, improve access to health care, provide an emergency increase for unemployment benefits, aide small businesses through a “paycheck protection program,” and sets up a loan program and support for Federal Reserve credit facilities, among several other provisions.
The agreement, which is expected to pump an unprecedented $2 trillion into the U.S. economy, was announced around 1 a.m. Wednesday morning by Sen. Mitch McConnell, the bill sponsor.
Below are some highlights of the CARES Act:
Small Business “Paycheck Protection Program”
New $349 billion SBA lending program, modeled on existing 7(a) program, with 100 percent government guarantee (as opposed to 75 percent guarantee for 7(a) loans).
Loan Program and Credit Facility
$500 billion for loans and loan subsidies and support for Federal Reserve credit facilities
Business Tax Provisions
Delay of payment of employer payroll taxes (defer payment of the employer share of the Social Security tax over following two years). Modifications for net operating losses (for 2018, 2019, 2020, loss can be carried back five years, temporarily suspends 80 percent limitation; extends to pass-throughs, sole proprietors).
Payments and Relief for Individuals
Direct payments to taxpayers equal to $1,200 per individual ($2,400 joint return), plus $500 per child. Phased out for incomes above $75,000 ($150,000 joint).
Pandemic Unemployment Assistance
Unemployment compensation is available for those not eligible for regular UI, including those who may have exhausted benefits.
An individual must provide certification that he or she is able and available to work, but is unemployed or underemployed due to:
- Coronavirus diagnosis or presentation of symptoms and seeking medical attention.
- A household member with coronavirus diagnosis.
- Caring for a family member who has been diagnosed.
- School or daycare closures and the individual is the primary child caregiver.
- Workplace lock-down.
- Advise from a health care provider to self-quarantine.
- The individual was about to start a job that is no longer available because of coronavirus.
- The individual is now the breadwinner of a household because someone has
- died from coronavirus.
- The individual had to quit because of a circumstance resulting from coronavirus.
- The individual’s place of work is closed because of coronavirus.
Emergency Increase in Unemployment Benefits
Upon agreement between a state, an additional $600 per worker, per week unemployment compensation payment is available. This compensation is 100 percent covered by the federal government.
Improving Access to Health Care
- Repeals the requirement that over-the-counter medical and health items previously deemed to be qualified medical expenses must be prescribed by a physician in order for tax preferred funds to be used when purchasing them.
- Delays of DSH reductions.
- Provides $75 billion to ensure healthcare providers continue to receive the support they need for COVID-19 related expenses and lost revenue.
- Appropriates not less than $500 million to provide preparedness support to facilities around the country. $200 million shall be provided to grantees within 30 days
- Allows for sharing of substance use disorder history across providers and in a patient’s electronic health record pursuant to the patient’s consent.
The legislation now heads to the U.S. House. Stay tuned for more updates on this story.