Yesterday the U.S. Senate released details of the HEALS Act, which is the GOP-led stimulus package meant as a follow-on the bi-partisan CARES Act. The HEALS Act is an approximately $1 trillion stimulus package, considerably smaller than the Democrat’s HEROES Act that passed in the House in May.
The Health, Economic Assistance, Liability Protection and Schools (HEALS) Act proposes the following:
- Stimulus Checks. Another round of individual stimulus checks structured in the same way that the CARES Act did, with many individuals receiving $1,200 and married-filing-jointly receiving $2,400. The HEALS Act would broaden the definition of “dependents” (as did the HEROES Act) to include additional $500 payments not just for dependent children, but also for adult dependents. The change may expand the pool of recipients by over 26 million people.
- Unemployment Benefits (PUC). The federal enhanced unemployment benefits, set to expire this week, would be extended through September, but unlike the initial Pandemic Unemployment Compensation (PUC) benefit of $600 per week, the new benefit would be $200 per week. Starting in October, the federal benefit would combine with the state unemployment benefit to replace 70 percent of a recipient’s lost wages. The bill also includes funding for states to update their unemployment systems to deal with future “surges” in benefit requests.
- Paycheck Protection Program (PPP). The PPP would be expanded under the HEALS Act, with the goal of focuses on small businesses and offering a second draw to companies with fewer than 300 employees that have experienced at least a 50 percent reduction in gross revenues. Those companies could take out a second loan quality to 2.5 times payroll, and the loans are forgivable if 60 percent or more of the money is used for payroll. The bill will also expand what PPP funds can cover, including “worker protection costs” and supplier costs. It simplifies forgiveness for smaller loans and expands PPP eligibility to certain 501(c)6 organizations, generally described as “business leagues.”
- Increased Employee Retention Tax Credit (ERTC). Currently, businesses will receive a 50 percent refundable payroll tax credit on “certain wages” paid during the crisis; the HEALS Act raises that to 65 percent and makes it easier to qualify for; it also raised the cap to $30,000.
- Work Opportunity Tax Credit (WOTC). The WOTC would be expanded by the legislation to include people who are unemployed by COVID-19 as a “qualified group.” The maximum credit would expand as well to 50 percent of the first $10,000 in wage.
- PPE Tax Credit and Full Deduction of Meals. The legislation creates a new 50% tax credit for the purchase of PPE and employee protection expenses related to COVID-19. It also temporarily expands the deduction for business meals to encourage businesses to support local restaurants.
- State Funding Flexibility, but No New Funds. The HEALS Act doesn’t create any new state funding (the HEROES Act has $1 trillion in additional aid to states, cities and territories) but does allow states to use the existing Coronavirus Relief Fund (CRF) dollars to cover revenue shortfalls (up to 25% of those funds).
- Liability Protection. This will limit the lawsuits that can be brought against healthcare providers, schools, and employers for exposure to COVID-19. In order for lawsuit to move forward, would have to show “gross negligence and a violation of state and local public health guidelines,” according to the Washington Post.
- Education Funding. The HEALS Act has $105 billion in funding for schools, with $70 billion of it targeted at K-12. “Two-thirds of that funding is reserved for helping schools reopen for in-person instructions,” writes the Post, requiring that schools meet certain minimums to qualify. Of that $70 billion, an estimated $7 billion is a one-time “state scholarship” fund to help families pay for private school tuition and other expenses.
Congressional leaders are meeting this week with the Treasury Department and White House to work out differences, with some of those strongest differences expressed over liability production and tying education funding to the re-opening of schools. We’ll keep abreast of the changes and let you know as news on this additional stimulus legislation breaks.