March 19, 2020

Families First Coronavirus Response Act Enacted into Law

By Michael D'Addio, Principal, Tax & Business Services

Tax & Business

In a rare instance of bi-partisanship, the U.S. Senate passed the House Coronavirus Bill (H.R. 6201 – The Families First Coronavirus Response Act) on a 90-8 vote on March 18. The act has been signed into law by the President. This is the second package from Congress dealing with the Coronavirus outbreak. Congress and the Administration are now working on “phase three” to further stem the impact of the outbreak on families and the economy.

The Families First act provides for:

Expanded food assistance and unemployment benefits through supplemental appropriations for health programs. This includes the WIC program, the Commodity Assistance Program, the Community Living Aging and Disability Program, MEALS and SNAP. Additionally if a school is closed for at least five consecutive days, each household with an eligible child can receive assistance under a state agency plan.
Expanded unemployment benefits through larger federal grants to the states to process and pay claims.
Healthcare plans, including high deductible health plans, to provide for COVID-19 testing at no cost to the insured. This includes diagnostic testing, including visits to a provider, urgent care center or emergency room. There is also a waiver of Medicare, Medicare Advantage, Medicaid and CHIP cost-sharing. In conjunction with previously issued IRS guidance, a participant in a high deductible health plan receiving this benefit would still be eligible to contribute to a Health Savings Account on a tax-advantaged basis.
A requirement that employers with 500 or fewer employees and government employers provide Emergency Paid Sick Leave to employees due to any of the following reasons:
1. To quarantine because the employee is diagnosed with coronavirus;
2. To seek a diagnosis or preventive care for coronavirus;
3. To comply with a recommendation or order by a public official with jurisdiction or healthcare provider on the basis that the physical presence of the employee would jeopardize the health of others due to exposure of the employee to coronavirus or exhibition of symptoms by the employee; or
4. To care for a family member for such purposes or to care for a child whose school has closed, or child care provider is unavailable, due to the coronavirus.
Full-time employees are entitled to 10 days of sick leave and part-time employees are entitled to the typical number of hours that they work in a typical two-week period, paid at two-thirds of the employee’s regular rate.

The sick leave amount is calculated based on the employee’s “required compensation” (i.e., the largest of (i) regular rate of pay, (ii) federal minimum wage, or (iii) local minimum wage) multiplied by the number of hours normally scheduled to work, but capped at (i) $511 per day ($5,110 in total) for those described above in items 1-3; and (ii) $200 per day ($2,000 in total) for other employees.
Employers with 500 or fewer employees and government employers must provide up to 12 weeks of job-protected Emergency Family and Medical Leave for a “qualifying need related to a public health emergency.” The technical corrections made to the original House bill limit the definition of a qualifying need to caring for a son or daughter under age 19 if their school or place of care has been closed or the child care provider is unavailable due to a public health emergency.

Paid Leave is calculated for an employee at an amount not less than 2/3 of the employee’s regular rate of pay (using the Fair Labor Standards Act of 1938) multiplied by the number of hours the employee would normally be scheduled to work. Under a Technical Corrections Act clarification, this amount of required paid leave cannot exceed $200 per day and $10,000 in total for an employee.
The law funds the Paid Sick Leave and Paid Family and Medical Leave for employers (including tax-exempt employers) through a refundable credit against payroll taxes. Self-employed taxpayers can receive a benefit through a refundable credit against income taxes for periods during which work cannot be done.

We will be monitoring any guidance which is issued on these new provisions. If you have any questions, do not hesitate to contact your Marcum professional.