$1 Trillion HEALS Act Introduced
On Monday, July 27, 2020, U.S. Senate Republicans announced a new round of proposed economic relief in a bill dubbed the Health, Economic Assistance, Liability Protection, and Schools (HEALS) Act. The proposed HEALS Act comes as renewed fears of COVID-19 and ongoing economic disruption caused by the public health response to it rise across the country, and some key provisions of the previously enacted CARES Act approach their expiration dates.
It is the Senate majority’s response to the much broader-reaching $3 trillion HEROES Act relief bill passed earlier this summer by the House of Representatives. Negotiations between the Senate, the House, and the Trump administration are underway to hammer out a compromise package between the Senate and House bills.
- The proposed HEALS Act is a package bill made up of previous Senate Republican bills to address economic relief and the public health response to the COVID-19 epidemic.
- The bill was introduced as a response to the HEROES Act, already passed by the House. A compromise between the bills will be worked out in ongoing negotiations.
- The HEALS Act would create a new federal pandemic unemployment benefit of $200 per week, to replace existing benefits that are expiring.
- The bill includes $160 billion in new relief loans to small businesses, seasonal businesses, and businesses in low-income areas.
- It contains tax credits to encourage manufacturing on protective equipment, for pandemic-related business expenses, and for employee retention.
- A new round of $1,200 relief checks (plus $500 per dependent) to taxpayers would be sent out.
- The bill provides $105 billion in aid payments to support education and re-opening schools, and provides liability protection to schools, businesses, and other organizations that follow reasonable re-opening precautions.
Pandemic Unemployment Benefits
Under the earlier CARES Act, eligibility for unemployment insurance benefits was expanded and a new $600 per week premium was added for recipients through July 31, 2020. To avoid a sudden drop off in benefits, the HEALS Act includes a new, albeit smaller, benefit of $200 per week (in addition to state benefits) to support the unemployed for another two months.
As of June 2020, the U.S. national unemployment level stood at 17.8 million unemployed.
After September 2020, the federal pandemic benefit would supplement only up to the lesser of 70% of the recipient's prior wages or $500 per week in benefits. This phased reduction in the benefit is intended to reduce disincentives to return to work created under the CARES Act program by benefits that, in some cases, exceeded the recipients’ work earnings.
Business Relief Loans
The HEALS Act would extend the existing Paycheck Protection Program for small businesses with fewer than 300 employees, to the tune of $190 billion. Borrowers would need to demonstrate at least 50% revenue loss during the COVID-19 pandemic to receive the loans which, as before, would be administered through the Small Business Administration. The HEALS Act would further provide $100 billion in new, long-term subsidized loans to seasonal businesses and businesses located in low-income areas with similar pandemic-related losses.
Business Tax Credits
The HEALS Act expands the Employee Retention Tax Credit established under the CARES Act for impacted businesses that maintain employees on their payrolls during the pandemic. The tax credit would rise from 50% to 65% of wages paid to retained employees.
The HEALS Act offers tax credits to businesses to provide personal protective equipment (PPE) for their employees and for manufacturers to expand PPE production in the U.S.
The Act also includes new tax credits for employee protection expenses resulting from operations during pandemic conditions, applicable to 50% of expenses for virus testing, cleaning supplies, and personal protective equipment (PPE) up to $1,000 per employee. On the supply side, the HEALS Act creates medical manufacturing tax credits to encourage the expansion of domestic manufacturing of PPE.
The bill also includes full tax deductibility (up from 50%) for business meals, targeted to stimulate the hard-hit restaurant industry.
Direct Relief Payments
For individual taxpayers, the HEALS Act includes another round of direct payments of $1,200 per person for those with incomes of $75,000 or less a year, and a $500 payment for up to three dependents. Conditions for these payments would be nearly identical to those distributed earlier in the year under the CARES Act.
This wildly popular program will be virtually copied from the previous CARES Act, with just a few clarifications and expansions.
However, there would be a few changes to the relief payments. This time around, additional eligibility would be extended to college-aged and other adult dependents, while the deceased and prison inmates would not be eligible.
School and Business Re-opening
The HEALS Act provides a $105 billion Education Stabilization Fund for schools and colleges, including block grants to state governors to spend based on local needs and conditions. Two-thirds of the money is earmarked for schools that will be re-opening in the fall. The bill also allocates funding for educational scholarships that can be used for a variety of expenses, including tuition.
Senate Republican leaders have indicated that a safe harbor from liability for schools and businesses that re-open is a must-have provision for this bill.
To facilitate the re-opening of schools and other businesses, the HEALS Act includes nearly five years of protection from liability lawsuits related to COVID-19. It creates safe-harbor protection for organizations that take reasonable precautions to comply with public health guidelines at the time. Acts of gross negligence would not be protected.