The Senate released their proposal for the next—and more than likely—final major COVID-19 response measure. The approximately $1 trillion package, called the Health, Economic Assistance, Liability Protection, and Schools (HEALS) Act contains the following provisions of interest:
Changes to Coronavirus Relief Fund (CRF) payments to states, territories, local, and tribal governments
- Extends the use of relief funds to pay for costs incurred by governments date from December 30, 2020 to 90 days after the last day of a government’s fiscal year 2021.
- Expands allowable uses of relief payments to states and local governments to include revenue shortfalls. To be able to use relief funds to cover revenue shortfalls, a government must certify that it has distributed at least 25% of the CRF funds it received to downstream governments. A government can use no more than 25% of relief funds to cover revenue shortfalls.
- Relief funds may not be used to rebuild any states, local, or other government’s rainy-day funds.
- Direct Payments to Individuals: Provides $1,200 for single taxpayers and heads of household, $2,400 for those married filing jointly. The credit will phase out identically to the first round of payments provided under the CARES Act, at 5 percent per dollar of qualified income above $75,000 for singles, $112,500 for heads of household, and $150,000 for joint taxpayers. Taxpayers’ income will be determined using 2019 or 2018 tax return.
- One difference from the CARES Act economic impact payments is that the $500 additional payment for eligible dependents will be expanded beyond qualified children (aged 17 and under) to include other dependents excluded from payment in the CARES Act, such as adult dependents, including those with no income and those whose income comes entirely from non-taxable means-tested benefit programs; such as SSI benefits are eligible for the full rebate amount.
- This provision creates uniform procedures for assessing state and local income taxes on remote and mobile workers affected by the government shutdown orders due to the pandemic. Under this provision, through 2024, employees who work in multiple states would be subject to income tax only.
- Temporarily expands the work opportunity tax credit (WOTC) to employers hiring individuals in qualified groups, and would include a new targeted group defined as 2020 qualified COVID-19 unemployment recipients. The maximum credit would be expanded from $2,400 (40 percent of the first $6,000 of qualified first-year wages) to $5,000 (50 percent of the first $10,000 of qualified first year wages).
- Creates a new refundable payroll tax credit equal to 50 percent of an employer’s qualified employee protection expenses, including coronavirus testing, cleaning supplies, and protective personal equipment (PPE). The maximum amount of qualified expenses is $1,000 for each of the first 500 employees, plus $750 for each employee between 500 and 1,000, and $500 for each employee over 1,000. The credit would apply to expenses paid after March 12, 2020 and before January 1, 2021.
CARES Act Treasury Provisions
- Clarifies that the jurisdiction of the Pandemic Response Accountability Committee includes both divisions of the CARES Act and subsequent coronavirus relief packages.
- Amends the CARES Act to include the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives in its list of appropriate congressional committees to provide oversight of the federal response efforts related to the pandemic.
Internal Revenue Service
- Provides $2 billion to modernize information technology systems at the Internal Revenue Service to enhance taxpayer service and strengthen cybersecurity protections.
Expanded Unemployment Benefits
- Decreases FPUC payments from $600 per week to $200 per week through September 30, 2020. Beginning in October of 2020, payments would be replaced with an up to $500 benefit, when combined with the state UI payment, which both collectively would replace 70% of lost wages. This would be done either by formula or by a state proposing an alternative method. States that cannot provide the second payment tied to lost wages by October 5, 2020 could apply for a waiver from the Department of Labor in order to continue paying a fixed dollar amount for up to two months. Also, beginning in October, additional payments would be counted as income when determining eligibility for federal low-income programs. The section also requires states, beginning 30 days after the enactment of the bill, to notify recipients of UI benefits and employers about state law regarding return to work and suitable work requirements. Specifically, states must notify individuals about their return to work requirements, their right to refuse to return to work or refuse suitable work and how the individual can contest the denial of a claim. Employers must be notified of the same information.
- Increases the 50% supplemental emergency unemployment relief for governmental entities and nonprofit organizations to 75%.
- Specifies that only those individuals who have lost their principal source of income are eligible for the PUA program.
- Appropriates $2 billion to assist states in upgrading their state unemployment insurance systems in order to better prepare for the surge in claims, adjust wage replacement levels, adjust earnings disregards, vary benefits over a period of time and automate processes that have traditionally been performed manually.
Other Labor-related Provisions
- Allows local boards to use more of their existing funds on incumbent worker training or transitional jobs by authorizing 40% of funds provided under the Workforce Innovation and Opportunity Act to be used for either activity. Authorizes additional funding ($500 million) for National Dislocated Worker grants, supporting apprenticeships, and Reentry Employment Opportunities program at the Department of Labor. Appropriates $1.15 billion to states for the administration of state unemployment laws.
- $450 million in WIOA State grants for adult, youth and dislocated state grants for states and communities to respond to layoffs and workforce impacts.
- $350 million for re-employment services, job search assistance, placement assistance for job seekers and services offered to employers such as referral of job seekers and special recruitment services.
- Authorizes funding for a formula grant to states in order to support job training, including through activities authorized under the Workforce Innovation and Opportunity Act such as customized training, on the job training, Individual Training Accounts, or transitional jobs.
- Creates a “Safe and Healthy Workplace” Tax Credit - a refundable payroll tax credit covering 50% of small businesses’ expenses on coronavirus-related safety measures such as COVID-19 testing for workers, protective personal equipment, cleaning supplies and spending on “qualified workplace technology expenses,” like contactless point-of-sale systems and contact tracing. Those refundable tax credits are also available to independent contractors, gig workers and self-employed workers
- Liability Shield – a five-year protection plan protecting schools, non-profits, medical facilities and other organizations from coronavirus-related lawsuits.
Small Business Provisions
- Authorizes $100 billion in long term, low cost 7(a) small business loans to “recovery sector” businesses, which includes seasonal businesses and businesses located in low-income areas that have no more than 500 employees and can demonstrate at least a 50% reduction in gross revenue.
- Loan amounts are up to twice the business’ annual revenues with a maximum of $10 million. 100% SBA guarantee with a maturity of up to 20 years and a 1% fixed interest rate.
- Loan uses include working capital, refinancing existing indebtedness, and acquisition of fixed assets.
- Provides $190 billion of appropriated PPP funds to support the program and PPP Second Draw Loans, which allows small businesses that have already accessed a PPP loan to take another one.
- Defines eligibility for PPP Second Draw Loans as businesses that have fewer than 300 employees and demonstrate a 50% reduction in gross revenues.
- Sets aside $25 billion for businesses with fewer than 10 employees.
- Sets aside $10 billion for loans made by community lenders.
- Rules regarding the Second Draw Loans are the same as the first loan.
- Businesses that have received a PPP loan already may not receive another loan that aggregates to more than $10 million.
- Expands forgivable expenses to include covered supplier costs, covered worker protection expenditures, and covered operations expenditures.
- Allows borrowers to select a preferred 8-week period through 2020 to use the forgivable loan proceeds.
- Simplifies the forgiveness application process for loans that are $150,000 or less.
- Expands PPP eligibility to include certain 501(c)(6) organizations, with 300 or fewer employees, excluding professional sports, political campaigns, and lobbying expenses.
- Establishes a specific PPP loan calculation for farmers and ranchers and provides Farm Credit System Institutions with greater certainty and equity in participating in PPP lending.
Department of Homeland Security (DHS)/Federal Emergency Management Agency Provisions
- Provides $3 billion for DHH.
- Provides $930 million for Federal Emergency Management Agency grants, including Assistance to Firefighter Grants and Emergency Food and Shelter Program.
- Provides $1.6 billion for Customs and Border Protection to offset the loss of immigration user fees from the pandemic.
- Authorizes U.S. Citizenship and Immigration Services (USCIS) to borrow up to $1.22 billion from the Department of Treasury for revenue shortfalls.
- Authorizes USCIS to charge a 10% surcharge on immigration examination fees until Treasury money is repaid.
- Holds Medicare Part B and D premiums at 2020 levels for 2021.
- Provides additional funding for Medicare providers.
- Delays the date on which hospitals and other providers have to start repaying Medicare Accelerated and Advance payment loans until January 1, 2021.
- Extends Medicare telehealth temporary expansions.
- Provides $16 billion to help states with testing and contact tracing.
- Expands telehealth in Medicare for Federally Qualified Health Centers (FQHCs) and Rural Health for five years beyond the end of the public health emergency.
- Allows patients to receive telehealth from FQHCs and RHCs regardless of where they are located.
- Provides $15.5 billion to NIH, $4.5 billion to SAMHSA, $150 million to CMS, $78.1 billion to the Public Health and Social Services Emergency Fund, $25 billion to the Provider Relief Fund, $2 billion to the Strategic National Stockpile, $20 billion to BARDA for vaccine, therapeutic and diagnostic development, $7.6 billion to Community Health Centers and $225 million to Rural Health Clinics.
- Creates TANF Emergency Fund.
- Provides $50 million in funding for the John H. Chafee Foster Care Program for Successful Transition to Adulthood for older foster youth.
- Waives the limit n percent of Chafee funds that can be used for housing assistance.
- Suspends work and education requirements for the education and training voucher program.
- Provides $10 million for Court Improvement Programs.
Provides $105 billion in additional education funding through Education Stabilization Fund (ESF) in CARES Act, including:
- $70 billion for K-12 relief:
- 1/3 of funds awarded to districts regardless of school operational status
- 2/3 of funds contingent upon school operational status. Schools submit plans to Governor, who sets criteria for approving plans, but must follow guidelines:
- Full funding if 50% of students attend in-person no less than 50% of time
- Prorated funding if some in-person instruction offered
- No funding if school offers only virtual instruction
- States reserve funds for private schools based on share of total student enrollment, awarded by Governor based on share of low-income students enrolled in private schools prior to pandemic
- $29 billion for higher education relief:
- $24.65 billion (85%) to all non-profit universities
- Formula: 90% based on institution’s relative share of Pell and 10% on total enrollment
- Can be used to defray expenses, offer student aid
- $2.9 billion (10%) to minority-serving institutions
- $1.45 billion (5%) to most affected institutions
- $1 billion for the Bureau of Indian Education and outlying areas
- $5 billion for a Governor’s Emergency Education Relief fund
- Additional $15 billion for childcare providers separate from ESF
- Maintenance of Effort: state FY20 and FY21 spending on K-12 and higher ed must be proportional relative to state overall spending in FY19
- Student Loan Repayment:
- Lets CARES suspension of student loan payments/interest expire on Sept 30, 2020
- Consolidates loan programs into two repayment plan options
- standard ten year mortgage-style payment plan
- income-based payment plan that limits payments to 10% of discretionary income (the income amount above 150% of the federal poverty line).
- Emergency Education Freedom Grants: Authorizes one-time, emergency appropriations funding for scholarship-granting organizations (SGOs) in each state.
- Adds a temporary check box on the FAFSA for applicants to report incidences of recent income loss to financial aid administrators to help those recently unemployed due to the coronavirus.
- Includes $20 billion for use by USDA Secretary to provide aid to agricultural producers, growers, and processors impacted by COVID-19 including non-specialty crops, dairy, livestock and poultry, including livestock and poultry depopulated due to insufficient processing access. This funding can be combined with $14 billion that remains from CARES Act.
Energy and Environment Provisions
- Proposes $1.5 billion for the Low Income Home Energy Assistance Program (LIHEAP) that aims help low income households pay home heating and cooling bills.
- Includes $10 billion for USDOT’s Airport Improvement Program (AIP) to help maintain operations at our nation’s airports that are facing a record drop in passengers. Funding will be distributed differently than it was in CARES Act with a focus on airport usage with funds able to cover operating expenses and debt service.
- Appropriates the following to the National Guard:
- Army National Guard: $30 million
- Air National Guard: $12 million
- This funding will be used for the construction and sustainment of temporary facilities intended to provide separation for individuals and all units deployed to or returning from OCONUS locations. Also, for the purposes of PPE, maximize teleworking, distance learning training capabilities and to support other necessary COVID-related investments.
- Provides $113.4 million in rental assistance to all currently assisted wage earning residents if they lost all wages and were unable to pay rent.
- Provides $2.2 billion in Tenant-Based Rental Assistance to maintain current Section 8 voucher rental assistance for low-income families.