Emergency Coronavirus Stimulus Packages I and II
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Overview of the Emergency Coronavirus Stimulus Packages I and II
On March 6, 2020, President Trump signed an emergency spending bill to aid in the United State’s response to COVID-19. This law is known as H.R.6074 – Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020. This spending bill allocates approximately $8.3 billion dollars to assist various governmental agencies. Specifically, this money is being allocated in various ways including: $3 billion for the research and development of vaccines, $800 million for research of various treatments; $2 billion for the Centers for Disease Control and Prevention, $61 million for U.S. Food & Drug Administration, $1 billion for state and local public health agencies; $1 billion in loan subsidies to be made available to help small businesses, small agricultural cooperatives, small aquaculture producers, and nonprofit organizations; and $500 million to allow Medicare providers to provide remotes telemedicine services to their patients.
On March 18, 2020, President Trump signed into law an economic stimulus plan that aims to address the impact of COVID-19 on Americans. This law, known as the Families First Coronavirus Response Act, is effective April 2, 2020 through December 31, 2020. According to the Congressional Research Service of the Library of the Congress, “th[e] bill 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.”
This Act requires certain employers, which generally means employers who employ less than 500 employees, to provide employees with paid leave if they are affected by COVID-19 under certain circumstances. Employers who pay out such benefits will receive tax credits to offset the cost of providing this paid leave.
The Department of Labor will be issuing further regulations to exempt health-care providers and emergency responders from these requirements. Additionally, regulations are also going to be issued for small businesses with less than 50 employees, if such requirements would affect the viability of the small business.
More specifically, this Act provides for the emergency expansion of the existing Family Medical Leave Act (FMLA). The expansion of the FMLA is only temporary but will now allow an employee, who is unable to physically go to work or work from home, to take up to 12 weeks of leave to care for a child (under the age of 18) if the child’s school or child care provider is unavailable due to COVID-19. The first 10 days of emergency FLMA can be unpaid (however the employee can use federal paid sick as explained below in conjunction) and thereafter the employer must pay the employee two-thirds of their regular rate for the number of hours the employee would have worked. Part-time employees are entitled to pay based on the average number of hours the employee worked for the previous six month timeframe. This is benefit is limited to $200 per day and $10,000 per employee overall.
Details in the Emergency Coronavirus Stimulus Packages I and II
This Act also provides for a new federal paid sick leave. This emergency paid sick leave provision allows an employee to take paid sick leave because the employee is:
- subject to a federal, state or local quarantine or isolation order related to COVID-19;
- advised by a health care provider to self-quarantine due to COVID-19 concerns;
- experiencing COVID-19 symptoms and seeking medical diagnosis;
- caring for an individual subject to a federal, state or local quarantine or isolation order or advised by a health care provider to self-quarantine due to COVID-19 concerns;
- caring for the employee’s child if the child’s school or place of care is closed or the child’s care provider is unavailable due to public health emergency; or
- experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
The employer would have to provide the employee with up to 80 hours of paid sick leave at the employee’s regular rate, or at two-third their regular rate if qualifying under item 4, 5, or 6 from the listed reasons above. This paid sick leave benefit is limited to $511 per day up to $5,110 or $200 per day up to $2,000 depending on the qualifying reason stated above.
As a benefit to the employer who provides benefits under the expanded FMLA or paid sick leave act, refundable tax credits are provided to be used against the employer portion of Social Security tax (FICA and Medicare). Employers are entitled to a refundable tax credit of 100% of the qualified family leave wages and sick leave wages paid for each quarter. Self-employed taxpayers are also allowed a credit against self-employment tax limited to 67% of their average daily self-employment income or $200 per day.
This act also provides $1 billion for emergency grants to states for activities related to unemployment insurance benefit processing and payment. It also raises the amount of assistance to states with high unemployment and who have already exhausted their benefits.
Additionally, this act requires that private health plans provide coverage for COVID-19 diagnostic testing and related services to employees and their covered dependents without charging any deductibles and copays.
A third stimulus is currently being negotiated in Congress. Some items currently being considered include relief for the industries hardest hit by COVID-19, direct payment to individuals, and assistance to small businesses. As of this morning, the third stimulus bill has not been signed into law, though lawmakers claim they are “very close”. We will continue to provide updates.
As you can imagine, these laws are brand new, and contain very little guidance. If you have questions about how these provisions affect you or your business, please contact us and we will happily assist you.