COVID-19 Federal Response Bill (CARES Act)
Here’s my first look at the COVID-19 Federal Response Bill (CARES Act) including unemployment, student loan relief and more.
FEDERAL DIRECT RELIEF TO FAMILIES
These payments are based on income and available even if you are still working.
Use this calculator to determine what kind of payment you can expect to receive.
DIRECT ONE-TIME PAYMENT:
- Single adult gets $1200; Married couples get $2400
- Additional $500 for each dependent child under age 16
EXCLUSIONS and LIMITS:
- No payment if someone else claims you as a dependent (most college students)
- Payment decreases if you earn more than $75,000 or, married couple earning more than $150,000
- No payment if your income is more than $99,000 (single) or $198,000 (married couple)
- Income levels based on Adjusted Gross Income 2019 or 2018 tax return.
METHOD of PAYMENT
When? Possibly before end of April, 2020
How: Credited against your tax liability/added as an addition to your refund, by direct deposit if you are in the system or by check in the mail
- Available to persons who are receiving social security
- These stimulus funds are NOT subject to federal income tax
- You should receive this payment even if your tax refund is garnished for other reasons.
If you did not file for 2018 or 2019, you should file ASAP so that you are in the system, even if you do owe $0.
UNEMPLOYMENT INSURANCE (UI) BENEFITS and CHANGES
You are covered by UI if:
- You are out of work because of self-quarantine requirements,
- You have a diagnosis or have symptoms,
- You must stay home to care for a household member who is diagnosed,
- You must stay home to care for a child or elderly person when their facility is closed
If your work continues, but you stay home because you are fearful that going to work puts you at risk, there is no direct answer to if you are covered. UI cases will be reviewed individually.
CATEGORIES OF BENEFITS:
Normal Unemployment Insurance (UI) Benefits
Assume these benefits apply to you if you are a regular W-2 wage earner.
Normally, if you lose your job or are laid off or furloughed, your UI benefits are subject to:
(1) base period wages;
(2) a “cap” on the amount received;
(3) a one-week “waiting period”;
(4) a limited number of weeks for which compensation could be made.
MOST OF THESE NORMAL RULES ARE NOW GONE OR CHANGED AS FOLLOWS:
1) Base period wages. The average worker earns about $1000/week. UI in Indiana replaces approximately 47% of that. Your wages are calculated not by any one paycheck, but by your average during a certain time period, the “base period. This remains.
For 2 examples:
(a) assume your average wage is $1000/week x 47% = $470/ week.
(b) assume your average wage is $500/week x 47% = $235/ week
2) Most states, including IN, put a “cap” on the total amount that you might receive. The Indiana cap is $390/week.
In the above examples:
(a) $1000/week x 47% = $470/ week; cap; receive $390.
(b) $500/week x 47% = $235/ week; receive $235
**Note: During the 2020 legislative session, I filed amendments to increase that cap, which has not been increased for about 20 years. This did not pass.**
CHANGE: Increased payment under new law:
For each week, the federal government will pay an ADDITIONAL $600. This extra payment will expire at the end of July, 2020.
Thus, in our examples:
(a) $390 + $600 = $990
(b) $235 + $600 = $ 835
3) One week waiting period: This normally means that you would not receive benefits for the first week out of work. This has now been WAIVED by Indiana.
4) Duration: In most states, the number of weeks that you can get paid UI benefits is limited; Indiana allows up to 26 weeks. The new federal law will extend this to 39 weeks.
PANDEMIC UNEMPLOYMENT ASSISTANCE FOR NON-TRADITIONAL WORKERS
If you are not a W-2 employee, but you are self-employed, own a small business, or are otherwise part of the “gig economy”, these special assistance programs may apply to you.
Since you do not have “base period wages”, your income base will be calculated on the basis of your tax return. This has to be done “by hand” by a state claim worker, but we are trying to get cooperation on this from the Indiana Department Of Revenue.
People in this category will receive a “federal minimum” of at least $150 plus $600.
**At this time, I do not know if there is a cap, but I assume it will be the same state cap of $390. The amount of wages is set by a new federal formula. I do not yet have that information.**
Part Time Workers: Will also qualify. There are some special rules. Your weekly earnings must be less than the weekly benefit that you would receive.
These rules are still vague.
DELAYS: The IN Department of Workforce Development (DWD) was staffed for an unemployment level of 3%. Now, the number of new claims has grown by 10x, and we had over 60,000 claims in a one week period. They are trying to staff up, but they are behind. Be patient.
ON-LINE CLAIMS: Try to make all claims on line. This is the fastest way. If you receive an indication that you are ineligible… try again in a few days. DWD is trying to revise all the computer technology necessary to make these program changes.
RETROACTIVE: These new benefits will be retroactive, we believe, to March 8, 2020. If you are already receiving benefits, or your benefits have run out, you still qualify. You will also qualify for the $600/week back to the date you became eligible, up to 3/8/20.
EFFECT ON OTHER FEDERAL PROGRAMS: If you receive UI + $600, be aware that this income level MAY now disqualify you for other need-based programs like food stamps. It should NOT affect Medicaid or CHIP.
FEDERAL STUDENT LOANS
These changes apply to those with FEDERAL student loans.
The feds have already waived 2 months of payment + interest for most loans. This extension is now out to SEPTEMBER 30.
WHO IS ELIGIBLE?
- Direct student loans from federal government in the past 10 years
- If you are on the 120 payments for public service loan forgiveness, this will NOT be negatively affected by the 6-month suspension
FFEL loans, Perkins, state, private loans: not covered by this legislation; however, these programs may be offering special assistance on their own. Check with your provider.
Be healthy. Keep your families safe.