Senate Republicans introduce a new stimulus package: The HEALS Act
On Monday, July 28, 2020, Senate Republicans introduced a new $1 trillion stimulus package, titled the HEALS Act. The new legislation carries a price tag significantly lower than the counterpart legislation introduced in early May 2020 by Democrats in the House of Representatives. According to Senate Majority Leader Mitch McConnell, the HEALS Act is intended to be a “tailored and targeted draft that will cut right to the heart of three distinct crises facing our country – getting kids back in school, getting workers back to work, and winning the healthcare fight against the virus.”
The new bill is expected to allocate over $100 billion to schools and universities, deliver additional stimulus checks, introduce a sequel to the Paycheck Protection Program, and provide additional resources to the country’s hospitals and healthcare workers. At this time, there is no single bill containing all of the proposed provisions. The following provides a summary of the key components and separate acts that comprise the HEALS Act as introduced on the Senate floor Monday afternoon.
- Unemployment benefits. Under the new American Workers, Families, and Employers Assistance Act, introduced by Senator Charles E. Grassley, unemployed workers would receive $200 per week from the federal government through September 2020. This is a decrease from the current $600 per week provided under the CARES Act. The additional unemployment insurance payments are set to expire on July 31. Further, all states would be required to switch to a new benefits system by October 2020 in which unemployment payments would equal 70 percent of a person’s pervious wages and be capped at $500 per week in additional payments above their standard unemployment insurance amount. The determination for the total amount of unemployment insurance payments will be made by a formula specified in the new bill or by an alternative state method approved by the Department of Labor.
- Stimulus payments. Similarly to the CARES Act, American households can expect an additional round of direct stimulus payments. The payments will follow the same formula as provided under the CARES Act and would be sent to largely the same people. All single U.S. citizens and U.S. residents with an adjusted gross income up to $75,000 would receive $1,200. Also like the first round of payments, the amount of the stimulus check would be lowered for individuals earning more than $75,000 and would phase out completely for individuals earning more than $99,000. However, unlike the CARES Act which capped the dependent age at 17, an additional $500 will be provided to taxpayers with dependents of any age.
- Payroll tax credit. The CARES Act provided for an employee retention tax credit equal to 50 percent of certain wages paid to employees during the COVID-19 pandemic. The new bill would increase the applicable percentage of qualified wages to 65 percent. Employers will be eligible for this credit if operations were fully or partially suspended due to a COVID-19 shut down order or gross receipts declined by more than 25 percent when compared to the same quarter in the prior year. This is a change from the CARES Act which required that receipts be declined by more than 50 percent. Further, this new section increases the limitation on qualified wages per employee to $10,000 per quarter, with a cap of $30,000 for the entire calendar year.
- Safe and healthy workplace tax credit. This legislation introduces the creation of a new refundable payroll tax credit equal to 50 percent of an employer’s qualified employee protection expenses. Qualifying expenses include testing for COVID-19, personal protective equipment, cleaning supplies, and modification to workspaces in orders to protect employees.
- Improving state stockpiles. The new act aims to establish state stockpiles of necessary medical products and supplies, such as personal protective equipment, ventilators and other medical products. In addition, states would be required to submit a stockpiling plan to the Secretary of Health and Human Services for maintaining a stockpile
- Increased telehealth plans. Employers would be authorized to offer telehealth plans as an excepted benefit to employees that do not work full-time or do not otherwise qualify for their employer’s coverage.
- Funding for healthcare sector. The HEALS Act sets aside, in addition to funding previously provided to the healthcare sector, $16 billion for testing, $16 billion for the National Institutes of Health, and $3 billion for the Centers for Disease Control and Prevention.
- Sequel to the Paycheck Protection Program (PPP). Senators Marco Rubio and Susan Collins introduced a new bill intended to provide an additional round of funding to America’s small businesses. The bill would allow small businesses negatively affected by the COVID-19 pandemic to receive a second PPP loan. The PPP sequel includes additional forgivable uses of PPP funds, including human resources and account needs, costs related to property damage due to public disturbances, and personal protective equipment investments. Further, the new bill reduces the maximum amount borrowers may receive under PPP funding from $10 million to $2 million. In addition, the senators introduced the creation of a nearly $60 million long-term recovery loan program which will provide further funding to industries hardest hit by the pandemic and will focus on assisting low-income communities, minority-owned, and seasonal businesses.
- Liability shield. The Safe to Work Act includes a five-year liability shield that, according to McConnell, will allow “nurses, doctors, charities, school districts, colleges, and employers [to] spend their next months actually reopening rather than fighting for their lives against frivolous lawsuits.” The legislation will temporarily limit liability for personal injuries caused by COVID-19 exposure at schools, colleges, nonprofits, churches and businesses. To qualify, entities must make reasonable efforts to comply with applicable public health guidelines and not engage in willful misconduct or grossly negligent behavior. In addition, health care providers, hospitals, nurses, nursing homes, and other care facilities would be protected from liability claims based on their provision of care for coronavirus or services provided as a result of coronavirus. All medical malpractice suits, including diagnosis and treatment, would need to met a willful misconduct or gross negligence standard.
- Education. Senate Republicans have allocated $105 billion for education. Over $70 billion of that money will be set aside for K-12 schools with a large amount reserved to help schools reopen for in-person instruction. In addition, $29 billion will go directly to higher education.
- State and local government aid. As presented on the Senate floor, the new bill does not offer any new dollars for state or local government aid. Instead, municipalities and states will be able to pull from an already existing $150 billion fund in a more flexible manner, such as utilizing the money to close budget deficits. The new flexibility, however, will only be permitted if the state has distributed at least 25 percent of its allocation to other local governments, including its cities and counties.
The future of the HEALS Act remains uncertain. Congressional Democrats have already started to voice opposition to the new bill, citing that it does not provide enough assistance to fully address the economic crisis caused by COVID-19. In addition, the chambers have less than 10 business days to reach a compromise before the Senate recess scheduled for August 7. We will continue to follow the HEALS Act and the ongoing negotiations surrounding the new stimulus bill and will provide an update when available.