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CARES Act Offers Economic Stimulus to Fight Impact of Coronavirus

Government enacts legislation that will send out stimulus checks, boost unemployment benefits

An ambulance sits in front of the U.S. Capitol.

Drew Angerer/Getty Images

En español | Congress and President Trump enacted a broad, bipartisan $2.2 trillion economic stimulus law Friday afternoon designed to fight the nationwide financial impact of the coronavirus by sending many Americans $1,200 checks, increasing funding for unemployment benefits and offering small businesses money to pay their employees, among other benefits.

The president signed the stimulus law Friday after the House of Representatives passed the massive stimulus package with a voice vote just a few hours earlier. The Senate voted 96-0 Wednesday night to pass the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Four senators were unable to vote because they had tested positive for the coronavirus or were quarantined at home out of caution that they may have been exposed to it. The CARES Act is now the largest emergency economic stimulus package in the history of the nation.

"On behalf of AARP's 38 million members and all older Americans nationwide, I thank the administration and leaders in Congress for their bipartisan work to address the unprecedented public health and economic crisis that faces our nation,” AARP CEO Jo Ann Jenkins said in a statement after the Senate vote. “Today older Americans, like Americans of all ages, worry about their families, their futures, their jobs and their retirement savings. Older Americans face the one-two punch of coronavirus's health and economic consequences, and many need immediate relief and ongoing help and support to cope with the pandemic. Those needs are only set to grow in the weeks and months ahead. That is why AARP supports the quick enactment of the bipartisan CARES Act."

What's included in the CARES Act

The law will address the wide-ranging financial impact of shutting down much of the nation to deter the spread of the coronavirus in the following ways:

Unemployment benefits

More than 3.2 million people filed new unemployment claims during just the week ending March 21, according to the U.S. Department of Labor. The CARES Act will create a new benefit, federal pandemic unemployment compensation, that Senate Minority Leader Charles Schumer (D-N.Y.) has described as “unemployment insurance on steroids.” The law will make it easier for people who lost jobs due to coronavirus-related circumstances — because of their health or business or school shutdowns, for example — to qualify for benefits. It also will make them eligible for an additional $600 per week on top of what they will already qualify for in unemployment benefits from the state. People receiving coronavirus-related unemployment could collect benefits for up to 39 weeks. The benefit, which will be retroactive to Jan. 27, will also be available to so-called gig workers.

People who have been furloughed by their employer — not working or getting paid, but still technically on the payroll — also will be eligible for unemployment benefits. The advantages of furlough status are that employers could quickly bring back workers once the economy improves and workers might be able to keep their employer health care plans when they're not on the job.

Stimulus checks

Individuals who earn $75,000 or less per year will receive a one-time check of $1,200 and children will receive $500. For people who earned more than that based on the adjusted gross income reported on their 2019 tax returns (or 2018 tax returns, if 2019 returns have yet to be filed), the amount of the check will get smaller the more money they earned over the $75,000 threshold. Individuals who earned more than $99,000 will not get a stimulus check at all. Social Security recipients are eligible to receive these stimulus checks based on their "1099" benefit statements; no additional paperwork needs to be submitted even if no tax returns were filed for 2018 or 2019.

Small businesses

The law includes more than $360 billion that small businesses could use to cover their payroll and other expenses. If a company that takes one of these federal loans retains most of its employees, part of what it borrowed will convert to a grant that the company will not have to pay back.

"We stand ready to work with Congress and the administration on further measures to protect Americans, especially seniors in nursing homes and other at-risk facilities, and address the health impacts of this terrible disease. Unity is our strength in fighting this virus."

— AARP CEO Jo Ann Jenkins


Dubbed a “Marshall Plan for U.S. hospitals” after the aid program that helped rebuild Western Europe after World War II, part of the Senate legislation will provide at least $100 billion to help health care facilities fight the pandemic. The money could be used to buy vital equipment such as ventilators and hire additional personnel.

Required minimum distributions

The recent ups and downs of the stock market have hurt many retirement savings accounts. The law will waive the rule that people 70 and older must take required minimum distributions (RMDs) for 2020 from traditional 401(k)s and individual retirement accounts. Since 2020 RMDs will be based on the value of accounts at the end of 2019, when the stock market was near all-time highs, the delay could give the accounts time to recover part of their previous value.

Student loans

Student loan debt is a growing problem for adults age 50 and older as many pay for their children's education as well as make payments on their own educational debt. Under the law, people will not have to make payments on federally held student loans until after Sept. 30. Interest on the loans will not accrue during that six-month period.

The legislation also includes an additional $500 billion that the treasury secretary could lend to large corporations that have been acutely affected by the pandemic, such as airlines and the cruise industry. A fund of $150 billion will be created to help state governments cover their coronavirus-related expenses.

The law is the third relief act enacted this year to address the health care and economic crises caused by the novel coronavirus, which causes the COVID-19 disease.

"AARP thanks congressional leaders for stepping up in a bipartisan way on three major pieces of emergency legislation now,” Jenkins said. “We stand ready to work with Congress and the administration on further measures to protect Americans, especially seniors in nursing homes and other at-risk facilities, and address the health impacts of this terrible disease. Unity is our strength in fighting this virus."

Editor's note: This story was originally published on March 26, 2020. It has been updated to include the president signing the bill.