The CARES Act and Its Benefits, Explained

The CARES Act and Its Benefits, Explained

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is an economic stimulus initiative Congress signed into law on March 27. Its primary purposes are to assist small businesses whose operations may be endangered by the COVID-19 pandemic. The CARES act also offers financial assistance for furloughed, under-employed or "gig economy" workers and their families during the economic slowdown.

CARES’ General Benefits for Individuals

The $2 trillion CARES package includes a one-time payment to millions of Americans whose income falls below a certain threshold. Individuals who made less than $99,000 and couples who made less than $198,000 combined, according to their last tax returns, will all receive their stimulus via direct deposit to their accounts or as a mailed check.

The standard payment of $1,200 will be made to all individuals who made up to $75,000 in adjusted gross income, or married couples who made a combined amount less than $150,000. For each child in those families, the individuals or couples will get an additional $500. So a married couple with two children earning $125,000 per year will receive a total of $3,900 ([$1,200 x 2] + [$500 x 3]).

The math changes a little for higher income brackets. For every $100 in income above the individual or combined limits, the rebate decreases by $5. So an individual making $80,000 per year would get a check for $950.

Additional Relief for Those Receiving State Unemployment Benefits

State unemployment agencies typically offer benefits that replace a good percentage portion of the insured’s missing income, but not so much that the beneficiary doesn’t feel the incentive to look for a job. However, with the COVID-19 pandemic stopping or slowing down most businesses, the insured’s ability to find a job is severely restricted.

The CARES Act is structured to supplement those on state unemployment to help with the financial hardship they may face during the pandemic. But it will additionally help under-employed workers: independent contractors and self-employed freelancers whose businesses may slow down and hires whose starts with new companies have been delayed by the pandemic.

State unemployment insurance beneficiaries will receive their usual, weekly state checks, as well as a $600 check from the federal government, for as long as they receive payouts, up to 13 weeks. The $600 amount not only alleviates the burden of looking for a job but acts as an incentive for the uninsured to stay home in areas where stay-at-home orders are in force.

Relief for Other Affected Groups

The CARES Act also expands benefits for other groups of people not normally eligible for state unemployment insurance, including:

• Workers who quit, were laid off or furloughed because of COVID-19

• Self-employed workers who can’t work because of COVID-19

• Workers taking care of children from home because of COVID-19 school closures

• People who are now primary income-earners in their households because the previous head of household died of COVID-19

• Newly hired workers whose start date was delayed or canceled due to COVID-19

These groups will also receive the $600 weekly payout through July 31.

Residents in some states may need to take additional steps to receive their CARES benefits. Since the federal government is negotiating these payouts with each state, contact your state unemployment department to find out what you need to do to receive your stimulus payments.