The $2 trillion-dollar Coronavirus Aid Relief and Economic Security (CARES) Act was recently approved to stimulate the economy during the COVID-19 crisis, which is shuttering many businesses and leading to layoffs. More than 6.6 million workers have already applied for unemployment compensation and that number will continue to increase as shelter-in-place orders are extended.

The following will provide some guidance of what is offered through the stimulus package for personal payments, unemployment, relief for renters and student loans.

PERSONAL STIMULUS PAYMENT

A one-time $1,200 payment was approved for single adults with an income below $75,000, who paid taxes in either 2018 or 2019. Couples making less than $150,000 combined can receive $2,400 based on their tax contribution. A qualified adult with dependent children (up to age 17) may also receive $500 per child. There are restrictions and guidelines as to who can and will receive a payment. Nerd Wallet has a calculator to give you a general idea of what you can expect.

EXPANDED UNEMPLOYMENT COMPENSATION

Unemployment compensation is administered by each state as a support program for workers who have found themselves out-of-work through no fault of their own. Generally, unemployment compensation has been offered mainly to full-time employees. However, the stimulus package has expanded the program to include self-employed, part-time, and furloughed workers who are affected by the Coronavirus.

In addition, the expanded program has extended the amount of weeks of unemployment aid. The full number of weeks and percentage of pay varies by state. For many states, 26 weeks is the typical amount of coverage. The Federal CARES Act adds 13 additional weeks, so a worker would now receive 39 weeks instead of 26 weeks. Information is available at the following links based on where you work: Pennsylvania; New Jersey; and Delaware. 

The Federal CARES Act also provides an additional $600 added to the calculated payment amount of aid each week.

The one week waiting period to receive funds has been waived; however, the processing time is longer due to the volume of claims.

Please note: the additional $600 payment is considered income when in review for participation in other programs outside of Medicaid and Children’s Health Insurance Program (CHIP). It may affect your eligibility for other programs.

The Expanded program remains open until December 31, 2020.

WHO IS ELIGIBLE?

• SICK and/or QUARANTINED: If you have a COVID-19 diagnosis or have been instructed to self-quarantine by a healthcare provider.
• GIG WORKERS: The Federal CARES Act covers Gig Workers, such as Uber drivers, freelancers, and independent contractors. The unemployment application has special instructions for these types of workers to file.
• UNEMPLOYMENT COMPENSATION RECIPIENTS: If you were already receiving unemployment compensation before the shelter-in-place disruptions, you will receive the 13-week extension and the additional $600 a week. If your unemployment benefits just ran out, reapply to receive the extension and additional payment.
• SUDDENLY UNEMPLOYED: If the business you work for was forced to close and you cannot go to work or work from home or you were laid off from a new job and didn’t have sufficient work history to previously qualify for unemployment compensation benefits.
• CARETAKERS:
  • If you are caring for a COVID-19 diagnosed or quarantined family member, you are eligible.
  • If your child(ren)’s school, daycare, or care facility for an elderly family member, child, or disabled family member has shut down and you can’t go to work.
  • If the provider of the household died from COVID-19 and the household depended on their income, you are eligible for unemployment compensation.

WHO IS NOT ELIGIBLE?

• Employees who are capable of working from home or on sick or paid leave.
• Employees who quit out of fear of exposure while the business remains open. However, if you had to quit because of self-quarantine or lack of childcare, you would be covered and should apply.

RELIEF FOR RENTERS

There is a nationwide moratorium for landlords who have mortgages backed or owned by Fannie Mae, Freddie Mac, or other Federal entities for 120 days. No penalties or fees can be charged for non-payment of rent.

Private owners are bound to the rules of their state. Renters should try to make arrangements with their landlord if they cannot pay.

STUDENT LOANS

Previous to the passage of the CARES Act, the Federal government had announced two months of waived payments and a halt to interest. The stimulus package extends this suspension of payments for any student loan held by the federal government until September 30, 2020. This does not mean loan amounts will be deducted – it just means that you can suspend payment until September and then pick up where you left off at your last payment. If you choose to suspend payments, after August 1, 2020, you will receive a notice (if eligible) to enroll in an income-driven repayment plan.

• However, if you choose/are able to continue to make payments, your payments will apply directly to the principle.
• Wage garnishments and seizure of tax refunds for default on student loans have been suspended. Interest will not accrue during suspension period.
• For those who are in a program for public service loan forgiveness, your account will still show as if a payment is made even though payments are not being made.
• Employers can offer repayment assistance of up to $5,250 without it counting as Employee income until the end of 2020.

WHO IS ELIGIBLE?

• Anyone who borrowed from the Federal Government by Direct Loan within the past 10 years.

WHO IS NOT ELIGIBLE?

• Loans not owned by the Department of Education: F.F.E.L, private loans, such as Perkins, or loans from state agencies.
• Private lenders, like Discover, Wells Fargo, or Sallie Mae, are not included in these requirements. Contact your loan provider to see if they have programs.

Please remember that details about this bill continue to emerge. We’ll try to provide updates on other areas of the bill as we are able, to ensure the Peirce community stays informed. This story is not legal advice. If you have questions about the CARES Act, please speak with your tax professional or a lawyer.