An update on federal legislation pertaining to the COVID-19 response
Here is an update on federal legislation pertaining to the COVID-19 response. The first two laws were enacted March 6, 2020 and March 18, 2020 respectively. The Coronavirus Aid, Relief, and Economic Security Act or CARES Act is currently under consideration. Details on all three are below.
March 6, 2020 – The first coronavirus response law (Public Law 116-123) or HR. 6074 Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020.
$8.3 billion in emergency funding for federal agencies to respond to the coronavirus outbreak
Provides FY2020 supplemental appropriations for the Department of Health and Human Services (HHS), the State Department, and the Small Business Administration to respond to the coronavirus outbreak.
- developing, manufacturing, and procuring vaccines and other medical supplies;
- grants for state, local, and tribal public health agencies and organizations;
- loans for affected small businesses;
- evacuations and emergency preparedness activities at U.S. embassies and other State Department facilities; and
- humanitarian assistance and support for health systems in the affected countries.
The supplemental appropriations are designated as emergency spending, which is exempt from discretionary spending limits.
- provides appropriations to the Small Business Administration for the Disaster Loans Program Account.
- provides appropriations to HHS for
- the Centers for Disease Control and Prevention,
- the National Institutes of Health, and
- the Public Health and Social Services Emergency Fund.
Provides appropriations to (1) the Department of State for the Administration of Foreign Affairs, and (2) the U.S. Agency for International Development for the Office of Inspector General.
- Global Health Programs,
- International Disaster Assistance, and
- the Economic Support Fund.
Telehealth Services During Certain Emergency Periods Act of 2020
- (Sec. 102) This section allow HHS to temporarily waive certain Medicare restrictions and requirements regarding telehealth services during the coronavirus public health emergency.
- (Sec. 103) This section exempts the budgetary effects of this division from (1) the Statutory Pay-As-You-Go (PAYGO) Act of 2010, (2) the Senate PAYGO rule, and (3) certain budget scorekeeping rules.
March 18, 2020 – A second package (Public Law No: 116-127) or HR. 6201 Families First Coronavirus Response Act
This law responds to the coronavirus outbreak by providing paid sick leave and free coronavirus testing, expanding food assistance and unemployment benefits, and requiring employers to provide additional protections for health care workers.
Specifically, the bill provides FY2020 supplemental appropriations to the Department of Agriculture (USDA) for nutrition and food assistance programs, including
- the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC);
- the Emergency Food Assistance Program (TEFAP); and
- nutrition assistance grants for U.S. territories.
The bill also provides FY2020 appropriations to the Department of Health and Human Services for nutrition programs that assist the elderly.
The supplemental appropriations provided by the bill are designated as emergency spending, which is exempt from discretionary spending limits.
The bill modifies USDA food assistance and nutrition programs to
- allow certain waivers to requirements for the school meal programs,
- suspend the work requirements for the Supplemental Nutrition Assistance Program (SNAP, formerly known as the food stamp program), and
- allow states to request waivers to provide certain emergency SNAP benefits.
In addition, the bill requires the Occupational Safety and Health Administration to issue an emergency temporary standard that requires certain employers to develop and implement a comprehensive infectious disease exposure control plan to protect health care workers.
The bill also includes provisions that
- establish a federal emergency paid leave benefits program to provide payments to employees taking unpaid leave due to the coronavirus outbreak,
- expand unemployment benefits and provide grants to states for processing and paying claims,
- require employers to provide paid sick leave to employees,
- establish requirements for providing coronavirus diagnostic testing at no cost to consumers,
- treat personal respiratory protective devices as covered countermeasures that are eligible for certain liability protections, and
- temporarily increase the Medicaid federal medical assistance percentage (FMAP).
To provide emergency assistance and health care response for individuals, families, and businesses affected by the 2020 coronavirus pandemic.
The CARES Act builds on the two former pieces of legislation by providing more robust support to both individuals and businesses, including changes to tax policy. The bill, an estimated $1.5 Trillion, includes:
- $300 billion allocated for Small Business Interruption Loans, which are meant to help small businesses (fewer than 500 employees) impacted by the pandemic and economic turndown make payroll and cover other expenses. Notably, small businesses may take out loans up to $10 million and cover employees making up to $100,000 per year; loans taken for this purposes are forgiven after four months if the business does not lay off its employees (forgiveness is scaled down as layoffs rise).
- A Recovery Rebate for individual taxpayers. Taxpayers with $2,500 in qualified income (defined as earned income, income from Social Security and certain pension income for veterans) qualify for a minimum rebate of $600 for singles and $1,200 for taxpayers filing jointly. From there, the rebate increases dollar-for-dollar with tax liability before credits until it reaches its maximum at $1,200 for singles and $2,400 for taxpayers filing jointly (see Chart 1). This means that refundable credits like the Child Tax Credit (CTC) and Earned Income Tax credit (EITC) are not considered when determining tax liability for the credit.
- The rebate phases out at $75,000 for singles and $150,000 for joint taxpayers at 5 percent per dollar of qualified income, or $50 per $1,000 earned. It phases out entirely at $98,000 for single taxpayers and $198,000 for joint taxpayers. Additionally, taxpayers making $2,500 in qualified income with children will receive a flat $500 for each child, though this amount is also subject to the phaseout.
- Creates a $300 above-the-line charitable contribution deduction for filers taking the standard deduction and expands the limit on charitable contributions for itemizers.
- Waives the 10 percent early withdrawal penalty on retirement account distributions for taxpayers facing virus-related challenges. Withdrawn amounts are taxable over three years, but taxpayers can recontribute the withdrawn funds into their retirement accounts for three years without affecting retirement account caps.
- A variety of business tax provisions:
- Corporations may delay making quarterly estimated payments until October 15, 2020.
- Employer-side Social Security payroll tax payments may be delayed until January 1, 2021. The Social Security Trust Fund will be backfilled by general revenue in the interim period.
- Firms may take net operating losses (NOLs) earned in 2018, 2019, or 2020 and carry back those losses five years. The NOL limit of 80 percent of taxable income is also suspended, so firms may use NOLs they have to fully offset their taxable income.
- The net interest deduction limitation, which currently limits businesses’ ability to deduct interest paid on their tax returns to 30 percent of earnings before interest, tax, depreciation, and amortization (EBITDA), has been expanded to 50 percent of EBITDA for 2019 and 2020. This will help businesses increase liquidity if they have debt or must take on more debt during the crisis.
- Technical corrections to the depreciation treatment of qualified improvement property (QIP) and the limitation on downward attribution of stock ownership, which affected foreign subsidiaries of U.S. firms to excessive tax and reporting requirements.
- Aviation excise taxes on kerosene are suspended until January 1, 2021.
- $208 billion in emergency relief to businesses such as airlines through loans and loan guarantees.
- COVID-19 Testing and Treatment. the bill would require group health plans and health insurance issuers offering group or individual health insurance to cover preventive services for the virus. It would also require diagnostic test providers for COVID-19 to make the cash price for the test available to the public on the internet.
- Current Students: colleges and universities are allowed to award “emergency financial aid grants” without regard to the usual need calculation; the amount of the grant can’t exceed the applicable Pell grant for the same year. The bill would also allow some payments to be made to students with work-study arrangements if they weren’t able to finish their work during the year because of the virus (including virus-related closings).
- The bill also allows the Department of Education to exclude some loans for students who were unable to remain enrolled in school as a result of a qualifying emergency (exceptions apply). Waivers also apply to Pell Grant repayments under the same circumstances.
- Suspension of Student Loans.The bill also provides that payments due for student loans shall be suspended – without interest – for three months.
- Corrections and Modifications.The bill also offers revisions and modifications to existing paid leave bills, including the Family and Medical Leave Act and the spanking new Families First Coronavirus Response Act.
- A variety of business tax provisions: