On July 31st, a provision from the CARES Act that added a $600 enhancement to weekly unemployment benefits expired.  Both the Senate and House continue to negotiate the next stimulus package.  The House has proposed the HEROES (Health and Economic Recovery Omnibus Emergency Solutions) bill while the Senate has put forth the HEALS (Health, Economic Assistance, Liability Protection, and Schools) bill as the next phase of Coronavirus related relief.  What are the key items these two bills contain and how can they impact you?  In this blog post, we will cover some of the key elements of each of these proposals.  Please note these are just proposals and nothing has been agreed to yet.

Direct payments to taxpayers – both branches of congress agree on the second round of direct payments to taxpayers.  In March, under the CARES act, stimulus payments of $1,200 were made to each taxpayer if they were under certain income thresholds.  Both the HEROES and HEALS act have this same provision.  Where the House and Senate differ is in the amount to dependents.  The CARES act allowed for $500 for each dependent under the age of 16 (college students and those aged 24 and under were not eligible).  The HEALS act pushed for the same $500 for each dependent with no age limitation while the HEROES act calls for $1,200 for each dependent (with a max of 3 dependents).

Unemployment assistance – this is perhaps the most publicized provision in both bills.  The CARES act allowed for $600 per week in supplemental unemployment benefits, which expired on July 31.  The HEROES act wants to extend this same benefit through January 2021 for most workers (March 2021 for certain independent contractors and self-employed individuals).  On the other hand, the HEALS Act would initially reduce this weekly benefit to $200 until the end of September.  After that, this benefit would be replaced with a payment covering 70% of a worker’s previous wages (capped at $500/week when combined with regular state benefits).

Student Loans – the HEALS Act could make some big changes to student loan repayment options.  Federally held student loans currently have nine different repayment options.  The HEALS act would cut this to two (standard repayment plan and income-based repayment plan).  The HEALS act would also allow federal student loan borrowers to defer payments past October 1st, while the HEROES act would extend this deferment until September 2021.

Small Business Relief – the CARES act allocated over $650 billion in forgivable loans to small businesses that qualified.  Currently, this program is set to expire on August 8th.  The HEROES act extends the deadline through the end of the year and eliminates some of the constraints on how these proceeds can be used by small businesses.  The HEALS Act also expands eligibility, adds $190 billion to the lending program, and allows small businesses to request a second loan.

Liability protection – one of the key provisions in the HEALS Act are liability protections.  The HEALS act contains a 5-year liability shield to prevent lawsuits against schools, businesses, and hospitals for COVID-19 related issues.  The hope is the protections will encourage companies to reopen without fear that they will spend years in court defending their decision to reopen.  The proposed HEROES act does not address this issue.

COVID-19 Testing – the HEALS Act sets aside $16 billion for Coronavirus testing and contact tracing and $20 billion for vaccine, therapeutic and diagnostic development.  The HEROES Act sets aside $75 billion for similar testing, contract tracing, and support to healthcare providers.

Over the past several weeks, both branches of Congress have introduced legislation to provide a second round of economic relief to those impacted by the COVID-19 pandemic.  The House has introduced the HEROES Act while the Senate has proposed the HEALS Act.  The estimated price tag of each of these bills is $3 trillion and $1 trillion, respectively.  While the final bill is still being negotiated by leaders in both parties, it will likely contain some of the key provisions such as a second round of stimulus to taxpayers.  The final legislation will likely look very different from each respective bill, with each side having to give in to get a deal pushed through.

 

Author: Brett Fry

Brett rejoined Forteris Wealth Management this year and is managing our office in Dallas, TX.  While helping clients plan for retirement, education and generational asset transfers, Brett's expertise in portfolio management, managing concentrated stock positions, planning for the sale of a business, and helping young professionals accumulate wealth enables him to guide clients through their continuously changing financial decisions.