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What’s in the New COVID-19 Relief Stimulus Bill?

On December 27, President Trump signed a $900 billion pandemic relief package that was passed by Congress into law. Like the CARES Act that was passed last spring, this legislation is designed to provide financial assistance for households and businesses that continue to be adversely affected by the coronavirus pandemic, as well as provide funding for COVID-19 vaccine purchase and distribution.

One of the highlights of the bill, which is nearly 5,600 pages long, is a second round of economic impact payments that will be made directly to millions of American families. However, these will be smaller than the first round of payments made through the CARES Act — just $600 per adult and $500 for each dependent child, instead of $1,200 per adult and $500 for each dependent child like before. 

Also, the payments will begin phasing out once an individual’s or household’s adjusted gross income (AGI) exceeds a certain level. Individuals whose 2019 AGI was between $75,000 and $87,000 and married couples whose 2019 AGI was between $150,000 and $174,000 will qualify for a reduced direct payment, while individuals and households with AGI above these levels won’t receive a direct payment.

Following is a rundown of some of the other major provisions of the legislation:

Jobless aid — Unemployed individuals will receive an extra $300 per week in federal unemployment benefits through March 14. This amounts to half of the $600 in enhanced unemployment benefits that were part of the CARES Act, which expired at the end of July. Like before, gig workers and some other types of employees who usually don’t qualify for unemployment will be eligible for these benefits.

The legislation extends the amount of time workers can claim benefits through both state and federal programs to 50 weeks. (States usually only provide 26 weeks of unemployment benefits.) It also provides an additional $100 per week in Pandemic Unemployment Assistance (PUA) for workers who have both wage and self-employment income but whose unemployment benefits don’t take into account self-employment income. 

Rental assistance — The legislation provides $25 billion in assistance for tenants who are behind on their rent payments while extending an eviction prohibition through January 2021. The funds will be dispersed to states using a formula based on each state’s population and landlords can apply on behalf of their tenants who meet eligibility requirements. These includes tenants who earn less than 80% of the median income in their area, have at least one person in the household who has lost a job, or can demonstrate that they are at risk of losing their home.

In a separate move, on December 28 the Department of Housing and Urban Development issued a moratorium through the end of February protecting homeowners from foreclosure on mortgages backed by the Federal Home Administration.

Ban on surprise medical bills — The legislation makes it illegal for hospitals to charge for services by out-of-network doctors or transport in air ambulances if the patient has no control over this decision.

Small business relief — The legislation makes an additional $285 billion available to qualifying small businesses for first- and second-draw forgivable Paycheck Protection Program (PPP) loans of up to $2 million while also simplifying the loan forgiveness process. The SBA is expected to issue new PPP loan forgiveness application forms in the coming weeks.

To qualify, businesses with a first-draw PPP loan must have no more than 300 employees and be able to demonstrate that they experienced at least a 25% reduction in revenue during any quarter of 2020 (compared to the same quarter in 2019). They also must demonstrate that they have used (or will use) the full amount of their first PPP loan. New PPP loans for first-time borrowers are expected to become available sometime in January with similar rules and requirements to the first round of PPP loans.

Other provisions — In addition to these provisions, the legislation includes targeted assistance for the airline and childcare industries, banks, rail and transit, and the agricultural sector. It also provides funds for education ($54 billion for K-12 schools and $23 billion for colleges and universities), broadband infrastructure, COVID-19 vaccine purchase and distribution, and COVID-19 testing, tracing and mitigation programs.

Give us a call if you have any questions about these provisions and how they might affect your personal financial situation.

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