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New Stimulus Proposal: The Heals Act

An intensifying coronavirus pandemic has prompted Congress to look at a second round of stimulus as the recession continues to deepen.

On July 27th, Senate Republicans announced the Heals Act (Health, Economic Assistance Liability Protection & Schools Act), a $1 trillion stimulus package proposal as a follow up to the Cares Act and a response to the Heroes Act, which House Democrats passed as a $3 trillion stimulus plan.

The release of the Republican proposal is just the first step toward solidifying the total economic package. Until a final decision is reached and signed into law, expect rounds of bipartisan negotiations to alter some of the terms. Lawmakers have until August 7, the last day before another month long recess, to decide.

Here are some highlights (although there are many more provisions):

  • The proposal includes $1,200 ($2,400 for married filing jointly) stimulus checks nearly identical to the direct payments authorized by the CARES Act earlier this year. The one key change is that taxpayers with dependents of any age will qualify for the additional $500 per dependent rebate.
  • Enhanced unemployment benefits would be extended under the proposal, although in a smaller amount. The proposal provides a flat $200 in federal unemployment benefits through September 2020. In October a new system would be put into place aiming to replace 70% of a recipient’s prior income when combined with state assistance.
  • The proposal extends the Paycheck Protection Program and makes other changes, with a focus on small businesses.
  • The proposal provides liability protection for individuals, businesses and healthcare providers that would limit lawsuits brought against them for exposure to Covid-19.

Second Stimulus Check

The proposal provides for stimulus checks based on similar eligibility criteria as the first round of direct payments. Specifically, all U.S. citizens and residents with adjusted gross income up to $75,000 ($112,500 for head of household and $150,000 for married filing jointly) are eligible for the $1,200 ($2,400 married filing jointly) rebate. To be eligible, one must not be a dependent of another taxpayer and must have a work eligible Social Security number.

There is an additional $500 rebate per dependent. In the CARES Act, this additional payment was limited to dependent children under the age of 17. Under the current proposal, there would be no age limitation.

As with the first stimulus check, the amount of the rebate begins to phase out with adjusted gross incomes over the above limits. The amount of the rebate completely phases-out once the income of a single filer exceeds $99,000, the income of a head of household filer with one child exceeds $146,500, or the income of joint filers with no children rises above $198,000.

As with the first payment, no action is required to receive these payments for most recipients. The IRS will use the taxpayer’s 2019 tax return if it’s been filed to determine eligibility, otherwise it will use their 2018 tax return.

Unemployment Benefits

The Heals Act would extend enhanced federal unemployment benefits, but at a reduced amount. A two-phased approach will replace the extra $600 payment.

In the first phase, the bill would continue supplemental payments in the amount of $200 a week through September 2020. In the second phase, beginning in October, this payment would be replaced with a payment of up to $500 that, when combined with state unemployment benefits, would replace 70% of a worker’s lost wages.

One concern with this approach is whether the unemployment insurance systems in many states can handle benefits tied to lost wages. To address this issue, the proposal allows states to apply for a waiver to continue paying a fixed dollar amount for an additional two months. It also would allocate $2 billion to assist states in upgrading their systems.

Limited Liability

The proposal limits the liability of individuals, businesses and health care providers in cases involving potential coronavirus exposure. The bill, among other things, requires the plaintiff to prove by clear and convincing evidence that the defendant’s conduct constituted gross negligence or willful misconduct. The proposal would also set a one year statute of limitation on such actions and limit the amount of punitive damages to no more than the amount of compensatory damages.

Paycheck Protection Provision

Sen. Marco Rubio (R., FL) introduced S.4321 to continue the Paycheck Protection Program (PPP). This is a continuation of the PPP enacted as part of the CARES Act, and proposes a second PPP loan to the most severely affected small businesses. The PPP loans would be available up to twice the borrower’s annual revenues, but no more than $10 million.

The bill also provides for “Second Draw Loans” for businesses that, among other things, have no more than 300 employees and can demonstrate at least a 50% decline in gross revenues. It also seeks to simplify loan forgiveness for covered loans under $150,000. READ MORE. You can also find a one page summary of the bill here.

We Are Here to Help

As negotiations proceed and final details are released, we will keep you updated.  When the next round of stimulus becomes law, we plan to host a series of webinar events including an update on PPP loan forgiveness.

Please visit the Warady & Davis LLP COVID-19 Resource Center for a wealth of information on stimulus assistance, new legislation and much more.  This information is updated regularly.  This is a rapidly evolving situation so please do not hesitate to reach out to us with any questions or concerns at 847-267-9600 or info@waradydavis.com.


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