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Margarita Spivak

What You Need to Know About the CARES Act

Margarita Spivak

March 31st, 2020 | Written by

What You Need to Know About the CARES Act

The two parties have come together to pass historic bipartisan legislation – the Coronavirus Aid, Relief and Economic Security (CARES) Act. This stimulus bill, signed into law on Friday, March 27th, will inject the economy with two trillion dollars and provide relief to individuals and businesses that have been impacted by the coronavirus pandemic.

Here are some of the key provisions included in the CARES Act:

Individuals and Families

Direct Payments: Estimated to total $300 billion. Taxpayers will receive a one-time direct deposit of $1,200 or $2,400 for married couples, plus an additional $500 per child. To receive the maximum benefit, individuals can’t earn more than $75,000 or $150,000 per couple. The payments downscale if you earn more and disappear completely for individuals earning more than $99,000 and couples earning more than $198,000. The payments will be based on either your 2018 or your 2019 tax filings. If you don’t file taxes but receive Social Security benefits, you’re still eligible. Your payments will be based on the information provided by the Social Security Administration.

Unemployment: Estimated to total $250 billion. Workers will be offered an additional $600 per week for four months in addition to what their state programs pay. The bill also adds 13 weeks of unemployment insurance. People nearing the maximum number of weeks allowed by their state can get an extension. Unemployment insurance benefits will be extended through December 31st for eligible workers. Self-employed, independent contractors and gig workers, who typically can’t apply for unemployment, can take advantage of the bill’s new Pandemic Unemployment Assistant Program if they’re affected by the coronavirus.

Student loans: Employers can provide up to $5,250 in tax-free student loan repayment benefits. Workers wouldn’t have to include this money as income.
Insurance coverage: All private insurance plans must cover COVID-19 treatments and vaccines. All coronavirus tests should be free.

Small Businesses

Emergency grants: Estimated to total $10 billion. Grants will be available up to $10,000 to provide emergency funds for small businesses to cover immediate operating costs.

Forgivable loans: Estimated to total $350 billion. Will enable the Small Business Administration to provide loans up to $10 million per business. Businesses can use these funds to maintain payroll, keep workers on the books, pay rent and mortgages. Existing debt may be forgiven. To qualify, workers must stay employed through the end of June.
Relief for existing loans: Estimated to total $17 billion to cover six months of payments for companies already using SBA loans.

Large Businesses

Large businesses: Estimated to total $500 billion. These corporations will have to pay this money back. Any company receiving loans under the CARE Act will be required to publicly disclose this information. They will also be barred from making stock buy backs for the term of the loan more plus one additional year.

Airlines: Estimated to total $58 billion. This will be used to help cover employees’ wages, salaries and benefits.

All Businesses:

Tax Credit: Businesses of all sizes can benefit from a fully refundable tax credit if they are closed or impacted by coronavirus. These funds are aimed to help keep workers on the payroll. The benefit encourages companies to hire employees back or put them on paid furlough to make sure they have jobs to return to. The credit covers 50% of payroll on the first $10,000 of compensation, including health benefits.

Public Health:

Hospitals responding to coronavirus: $100 billion

Community health centers: $1.32 billion

Drug Access: $11 billion for diagnostics, treatments and vaccines. Also included is $80 million for the FDA to prioritize and expedite approval of new drugs.

CDC: $4.3 billion for coronavirus programs and response efforts

Veterans’ health care: $20 billion

Medicine and supplies: $16 billion to increase supply of ventilators and masks

Safety Net:

Food: $8.8 billion for child nutrition, $15.5 billion for food stamps and $450 million for food banks

State and Local Governments:

Local programs: $339.8 billion will be divided toward specific coronavirus efforts, direct aid for local and state governments running out of cash, community development block grants, schools and child care centers

Education:

Student loan relief: All loan and interest payments are deferred through September 30th without penalty.

Other programs: There are benefits for students forced to drop out due to coronavirus. Also, legislation allowing schools to re-allocate work-study funding into supplemental grants while continuing to pay work-study wages.

Other questions?

As always, we’re here for you. If you have any other questions, please send us a message below or call us at (410) 363-7211.

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This information is not intended to be used as the only bases for investment decisions, nor should it be constructed as advice designed to meet your particular needs. You are advised to seek the advice of your financial advisor prior to making any decision based on any specific information contained herein.
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