One day after H.R. 6201, the Families First Coronavirus Response Act, a relief package, was signed into law, Senate Republicans threw down their marker for an even more significant phase three relief package that includes scores of provisions to support battered sectors of the economy, including providing relief to individual Americans.
What Is Included?
Senate Majority Leader Mitch McConnell (R-KY) has described the bill as, "first, direct financial help for the American people. Second, rapid relief for small businesses and their employees. Third, significant steps to stabilize our economy and protect jobs. And fourth, more support for the brave health care professionals and their patients who are fighting the coronavirus on the frontlines."
Direct Financial Help for the American People
The $1 trillion package pushes the April 15 tax filing deadline back by three months and calls for rebates of $1,200 to taxpayers and $2,400 for couples up to certain income levels as well as an additional $500 per child. This provision provides recovery checks (building off an individual's 2018 tax return) directly to individuals and families based on income, marital status and dependents.
These checks are reduced for higher-income taxpayers and are completely phased out for individuals with incomes exceeding $99,000 or joint filers exceeding $198,000. Taxpayers with little to no income tax liability but with at least $2,500 of qualifying income (including earned income, Social Security retirement benefits, and certain compensation and pension benefits paid to veterans), are eligible for a minimum rebate check of $600, ensuring relief gets to low-income seniors and disabled veterans.
Consistent with past disaster relief legislation, the measure proposes to allow Americans to remove up to $100,000 from retirement accounts as coronavirus-related distributions if they or their family members have been diagnosed with the disease or if they were furloughed, laid off or adversely impacted by the crisis financially. The package also incentivizes charitable contributions, giving the nod to calls from nonprofit organizations concerned about the impact the epidemic will have on their finances.
For businesses, the proposal contains deferrals for paying estimated taxes and payroll taxes in a move seeking to provide liquidity to businesses navigating constrained demand as well as other tax benefits.
Rapid Relief for Small Businesses and Their Employees
This package also increases funding and eases eligibility standards for loans to small businesses. Division A, Small Business Interruption Loans, allows any business with fewer than 500 employees to be eligible to apply for and receive a loan to cover payroll (including paid sick, medical or family leave), employee salaries, mortgages, rent, utilities, as well as other assorted debt payments. These loans would be forgiven if the businesses maintain their payroll and employees between March 1, 2020 and June 30, 2020.
Stabilize the Economy and Protect Jobs
Division C, titled "Assistance to Severely Distressed Sectors of the United States Economy," focuses on economic stabilization provisions, including the implementation of the much-discussed aviation tax holiday. From the enactment of the legislation to January 1, 2021, excise taxes on airlines will be waived. Furthermore, Division C will provide emergency loans and loan guarantees to eligible businesses that do not exceed $208 billion as determined by the Secretary of the Treasury so long as no employee within the business making more than $425,000 receives payment from the loan.
The Republican proposal contains a number of health-related provisions. These include:
- Requiring the Strategic National Stockpile to add additional items, including respiratory protective devices and medical equipment used for health care workers for administering health care services
- Requiring manufacturers of certain devices to report to the Secretary of Health and Human Services on any disruptions that would disrupt the supply chain
- Requiring insurance coverage of COVID-19 tests and vaccinations
- Providing more than $1 billion to support community health centers
- Providing grants to support the use of telehealth as well as rural health care services
The proposal builds upon actions by Congress and the administration earlier this month to allow for expanded use of telehealth, including by allowing payment for telehealth services during the emergency provided by federally qualified health centers and rural health centers. Telehealth has become a vital aspect of accessing health care, as more and more people are quarantined or attempting social distancing in order to prevent the spread of the virus.
Thus, this package would allow a high-deductible health plan with a health savings account (HSA) to cover telehealth services prior to a patient reaching their deductible. In order to provide broader access to health services, this provision would also waive the restrictions from the first supplemental package that required a patient to have seen the provider within the last three years, enabling patients to receive telehealth services from a wider variety of providers.
The proposal would also temporarily waive the requirement for a face-to-face visit before Medicare would pay for home dialysis services. The legislation will also create a new safe harbor to allow HSA-qualified high deductible health plans (HDHP) to cover telehealth without the loss of HDHP status. This allows an individual to be enrolled in plans offering solely telehealth benefits. The Department of Health and Human Services (HHS) will pay for telehealth services furnished by federally qualified health centers or rural health clinics during the COVID-19 emergency.
On the financing side, Medicare providers would secure relief through the end of the year from the across-the-board reduction or sequestration of payments they have dealt with for nearly a decade as part of previous Congressional budget measures. And hospitals would gain under a new COVID-19 add-on payment under the Inpatient Prospective Payment System. Group health plans and individual health care coverage must provide coverage with no cost-sharing.
Importantly, the third supplemental package looks to mitigate emergency drug shortages by expediting the review, inspection and development of drug applications aimed at the prevention and containment of COVID-19. Lawful marketing of the COVID-19 testing devices will also be approved upon passage. The legislation also requires manufacturers of necessary medical devices to notify the Secretary of Health and Human Services about any discontinuances in device manufacturing or interruption of the manufacture that will lead to a meaningful disruption of supply.
Medical equipment used for health care workers for administering health care services, such as masks, has also been added to the Strategic National Stockpile to aid with shortages. Much has been discussed about the shortages of supplies and medical devices due to the added strain on health systems during the escalation of COVID-19.
For stakeholders, the key points are that Congress is moving quickly to develop the phase three relief package that may be the last "must-pass" legislative vehicle for the foreseeable future. Those seeking to get their proposals in will need to act quickly, particularly if the measure expands further and includes items, such as expiring health extenders, that were scheduled to move in May.
What Is Next?
While Senate Republicans want to move forward with alacrity, Democrats are concerned the package does too little to support individual Americans impacted most acutely.
While the bill contains a number of provisions that enjoy bipartisan support, Democrats are working on alternatives that would likely focus more on direct support for individuals and families as well as support for sectors hit hardest by the economic stagnation of the past few days. We can expect further discussions in the House as the Senate looks to pass the third supplemental package and that these will play out over the coming days. It is important to note that not all Republican members of Congress are happy with the economic stimulus and believe that further means testing is needed to make sure that money is going to those most affected by the COVID-19 emergency.
The key for stakeholders is that just like the fast pace of the first two COVID-19 response measures, activity on this package will likely play out very quickly necessitating real-time engagement on priority requests.
In the meantime, the House of Representatives is remaining in their planned recess until they need to return to vote, while the Senate has stated they will work through the weekend to pass the necessary legislation. Given the escalation of diagnoses, growing shortages of medical supplies and lack of testing, the administration may continue to reduce regulatory burdens for those involved and impacted by COVID-19 despite the shifting timeline of Congress.
How Did We Get Here?
The first supplemental package, H.R. 6074, the Coronavirus Preparedness and Response Supplemental Appropriations Act, was signed into law by President Donald Trump on March 6. This funding package provides $8.3 billion in funding, including grants to states, purchasing and stockpiling power for the federal government, funds to spur vaccine development and funding to respond to coronavirus abroad. $500 million is provided to cover the estimated cost of mandatory funds necessary to fund the bill's new authority to allow certain Medicare patients to use telehealth technologies to access care. This first package focused primarily on access to care, and research and development of necessary services as states prepared for the emerging epidemic.
The second package, H.R. 6201, the Families First Coronavirus Response Act, responded to the coronavirus outbreak by providing paid sick leave, expanding food assistance and unemployment benefits, and requiring all private health insurance plans to provide coverage for FDA-approved COVID-19 diagnostic tests, including provider, emergency room and urgent care visits with no cost-sharing for the beneficiary. The second package focused on safety net programs and ensuring affordable services for all those who seek care, despite insurance or employment status or income.
On March 13, President Trump officially declared a national emergency, freeing up $50 billion in federal resources to combat COVID-19. The declaration of a national emergency determines the legal and operational resources available to respond to an emergency, such as the outbreak of COVID-19, by increasing federal officials' powers to respond to and assist states and localities through emergency protective measures undertaken to reduce an immediate threat to life.
By invoking the Stafford Act, the Federal Emergency Management Agency (FEMA) will be able to provide disaster relief funding to state and local governments. This includes the ability for a state to request a 75% federal cost-share for expenses that include emergency workers, medical tests, medical supplies, vaccinations and security for medical facilities, among other things.
On March 17, Acting Director of the Office of Management and Budget, Russel Vought, wrote a letter to Congress requesting additional funding to support the United States' response to COVID-19. Specifically, the letter requests $45.8 billion for a number of agencies, including, but not limited to, the Centers for Disease Control and Prevention (CDC) and the National Institutes of Health's (NIH) National Institute of Allergy and Infectious Diseases (NIAID).
It is important to note that this letter holds no legislative authority but rather was a suggestion for priorities for Congress to fund. This letter prompted the action of the Senate to take up the third, and likely not the last, supplemental appropriation package. The third supplemental package will focus on economic stimulus to combat the recent drop in economic conditions.
As the number of cases around the world grows, Faegre Drinker’s Coronavirus Resource Center is available to help you understand and assess the legal, regulatory and commercial implications of COVID-19.