By now, you’re probably aware of the $2 trillion Coronavirus Aid Relief and Economic Security Act (CARES). The stimulus packaged is loaded with all kinds of programs, as you might imagine. This article is going to focus on how it affects high-income earners like doctors. Here is a big picture overview of the stimulus breakdown before we get into the details of each category.
- $560 Billion to individuals
- $500 Billion to large businesses
- $377 Billion to small businesses
- $340 Billion to State and Local governments
- $154 Billion to public health
- $44 Billion to education
- $26 Billion to safety net
Stimulus for Individuals
The highlight of the legislation for many Americans is the individual stimulus. It’s a $1,200 check plus $500 per child. For example, a family of four will get a check for $3,400. Many reading this, however, will get nothing. The stimulus phases out between $75,000 and $99,000 ($150,000 and $198,000 married) in adjusted gross income.
Large Business Stimulus
While this might not help you directly, remember that big corporations are really just composed of individuals. They invest in stocks via mutual funds and 401(k)s. You can think of this segment as a stimulus to your retirement account. There is also a refundable tax credit for businesses of all sizes that are closed or just “distressed” to keep workers on payroll. It covers up to 50% of payroll on the first $10,000 of compensation, including benefits. The idea is to help companies put employees on furlough rather than firing them.
Small Business Stimulus
Small businesses have access to two different types of SBA loans under the CARES Act. There is $10 billion set aside for “emergency grants” to cover immediate operating costs, up to $10,000 per business. There is also the Payment Protection Program allowing small businesses to borrow up to 2.5X their average monthly payroll up to $10 million. The amount of the loan used for payroll, rent, utilities, and loan interest for the first eight weeks is forgivable.
Public Health Stimulus
This section of the CARES Act is specifically designed to help health care organizations. $100 billion goes to hospitals, $1.3 billion to community health centers, $11 billion for tests, treatments, and vaccines, $80 million to the FDA to approve new drugs, $4.3 billion to the CDC, $20 billion to the Veteran’s Admin, $16 Billion to the Strategic National Stockpile. Some of this money will flow through to individual doctors, but mostly this section is about fighting the pandemic.
Education Stimulus
The biggest part of this segment is that all federally-owned student loans have both payments and interests waived until September 30th. If you have a federal student loan, you get 6.5 months of no payments and 0% interest. This is a great benefit for many doctors. 25-33% of doctors have student loans, and most of them are federal.
