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Client Alert

March 20, 2020

Second Coronavirus Aid Package


On March 18, President Trump signed into law H.R. 6201, the Families First Coronavirus Response Act (Public Law 116-127), a second coronavirus, or COVID-19, response package. Funds in the Act are designated as emergency spending and not subject to regular discretionary budget caps.

Leave Program:
  • Emergency Family and Medical Leave Expansion: 
    • This provision expands the Family and Medical Leave Act requiring employers with fewer than 500 employees and government employers to provide up to 12 weeks of paid leave (no less than two-thirds pay) to employees if that “employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency.”  Public health emergency is defined as the declaration by federal, state, or local authority due to COVID-19. The first 10 days of leave may be unpaid; an employee may substitute accrued vacation, personal leave, or medical/sick leave in lieu of unpaid leave.  The first 10 days of leave may also be comprised of the Act’s new emergency paid sick leave program (see below). 
    • The benefit is capped at $200 per day. Wages paid by employers because of the Emergency FMLA Expansion are not considered wages for the purposes of the Social Security or Medicare excise tax. 
    • The Secretary of Labor is authorized to issue regulations to: ‘‘(A) to exclude certain health care providers and emergency responders from the definition of eligible employee….; and ‘‘(B) to exempt small businesses with fewer than 50 employees from the requirements of section 102(a)(1)(F) when the imposition of such requirements would jeopardize the viability of the business as a going concern.”
  • Emergency Paid Sick Leave: 
    • This provision establishes a new, temporary sick leave program requiring employers with fewer than 500 employees and government employers to grant full-time employees 14 days (80 hours) of paid sick leave for those affected during the current COVID-19 crisis and unable to work or telework.  The benefit is capped at $511 per day.
    • Employees would be paid at the regular rate when the employee needed to self-isolate or seek treatment; pay would be limited to two-thirds of an employee’s regular rate when caring for a family member or child (including when a child’s school has closed or child care is unavailable).  The paid sick leave program will expire December 31, 2020. Wages paid by employers because of the Emergency FMLA Expansion are not considered wages for the purposes of the Social Security or Medicare excise tax. 
  • Tax Credits:
    • To help employers pay for expanded FMLA and paid sick leave, the bill establishes an optional 100% tax credit applied to the employer portion of the Social Security and Medicare tax. Government employers are not eligible for the tax credits. The bill imposes specific limitations on the tax credit for both sick leave and FMLA wages.   
    • For emergency sick leave, the credit cannot exceed $511 per day per employee.
    • For expanded FMLA, the credit cannot exceed $200 per day per employee, capped at $10,000 per employee.
    • Self-employed individuals would also receive a tax credit for sick leave and family medical leave, to be credited against their income tax.   Credits are available for wages paid from 15 days of enactment (15 days from March 18) through December 31, 2020. For expanded sick leave, the employee would receive the lesser of $511 or 100% of average daily income per day.  For expanded FMLA, the employee would receive the lesser of $200 or 67% of average daily income per day. 
    • The bill provides $15 million to the Department of Treasury/IRS to implement tax credits for paid sick and FMLA expansion.
Additional Appropriations: 
  • Testing: 
    • $1 billion to HHS/Public Health and Social Services Emergency Fund for the National Disaster Medical System to reimburse the costs of diagnostic testing for uninsured individuals. 
    • $64 million would be provided to the Indian Health Services to cover the costs for diagnostic testing.
    • $60 million to the Veterans Health Administration to cover the costs for diagnostic testing.
  • Food Aid: 
    • $1 billion for expanded food aid, including $500 million to the Women, Infants and Children program and $400 million to the Emergency Food Assistance Program.  Work requirements for those receiving food stamps would be temporarily waived during the COVID-19 crisis.  The bill grants states flexibility in distributing the Supplemental Nutrition Assistance Program (SNAP) and the Child Nutrition Program.
    • $250 million to HHS/Administration for Community Living for home-delivered and pre-packaged meals for low-income seniors
Insurance Coverage for Testing:
  • Commercial health insurance plans will be required to cover, with no cost-sharing, diagnostic testing for COVID-19.   The bill waives any cost-sharing under the Medicare Part B, Medicare Advantage, Medicaid, CHIP, Tricare, Veterans, federal civilian, and Indian Health programs for visits related to testing of COVID-19. 
Unemployment Insurance:
  • $1 billion in emergency grants to states to expand unemployment insurance benefits.
Increased FMAP:
  • The bill would provide states with a 6.2% increase on their traditional Federal Medical Assistance Percentages (FMAP) for medical services during the length of the public health emergency. 
PREP Liability:
  • The bill codifies the recent White House announcement regarding N95 respirators.  Specifically, certain NIOSH-approved personal respiratory devices will be granted temporary liability protections under the Public Readiness and Emergency Preparedness (PREP) Act, provided they are subject to a FDA Emergency Use Authorization (EUA) for emergency use of personal respiratory devices and provided they are only used from January 31, 2020 to October 1, 2024 and in response to the COVID-19 public health emergency.
Telehealth:
  • The bill makes a technical correction to the first coronavirus supplemental appropriations bill (Public Law 116-123) to clarify that during this public health emergency, furnishing a service allowable under the Medicare program, even if the program did not pay for such service, is a qualifying relationship.