Key provisions of the CARES Act (Coronavirus Aid, Relief, and Economic Security Act)

Zurich North America’s Government Affairs team shares an update on key provisions of the 2020 COVID-19 economic stimulus package.

Zurich North America’s Government Affairs team has been working with the Trump Administration and Congress on solutions that will benefit the overall economy and strengthen the insurance industry as we all work to end the pandemic.

We would like to provide you with an update on the federal government’s response to the pandemic.

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is the third stimulus package from Congress to help our nation overcome the health and economic challenges of the coronavirus. The estimated $2 trillion bill was signed into law by the president on March 27, 2020. Policymakers hope that the CARES Act will help preserve jobs and stabilize the economy, giving small businesses and distressed industries the time and money they need to address the effects of the coronavirus pandemic on the U.S. economy.

The two previous responses were 1. Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (P.L. 116-123, legislative text and summary) and 2. Families First Coronavirus Response Act (P.L. 116-127, legislative text and summary.)

The CARES Act dwarfs anything produced by the U.S. Congress. For example, in 1948, Congress approved the European Recovery Program, better known as the Marshall Plan, to help fund the recovery of Europe after World War II at a cost of $12 billion (or approximately $128 billion in 2020 dollars). Over a decade ago, through the Troubled Asset Relief Program (TARP) in the aftermath of the 2008 financial crisis, Congress authorized $700 billion to purchase toxic assets and equity from financial institutions. A year later, when Congress approved the American Recovery and Reinvestment Act of 2009 (ARRA), it provided $787 billion in funding. In the end, the TARP recovered $441.7 billion, generating a “profit” of $15.3 billion on the $426.4 billion invested by the federal government.

With Congress recessing until April 20, members and staff plan to use the next month to negotiate a fourth piece of legislation to provide additional economic relief and emergency supplemental funding. “This is not going to be the last bill,” said Nancy Pelosi (D-Calif.), Speaker of the U.S. House of Representatives. Pelosi indicated that she foresees a fourth bill that would focus on job creation and infrastructure spending. While not ruling out the need for additional legislation, Republicans remain focused on ensuring implementation of the Phase III package, at least for the immediate future. House Minority Leader Kevin McCarthy (R-Calif) has suggested that discussion of Phase IV or Phase V legislation at this time is premature.

Members of Congress are now talking about including major surface transportation infrastructure funding in a future stimulus bill to promote economic recovery. For example, Senate Environment and Public Works Committee Chairman John Barrasso (R-Wyo.) is advocating for inclusion of portions of his committee’s bill, the proposed America’s Transportation Infrastructure Act, which funds federal-aid highway programs. The House Transportation and Infrastructure Committee is drafting its surface transportation bill to include in the House version. Until now, the major hurdle for funding a substantial infrastructure bill had been how to pay for it. That no longer seems to be the hurdle that for so long has stood in the way of prior legislative efforts.

Zurich will continue to work with government policymakers and our customers for a responsible return to normalcy.

The following highlights various provisions included in the CARES Act that we want to bring to your attention. These provisions may be important to you or your business, and you may wish to seek additional advice.

Loans and grants to air carriers, national security and all other U.S. businesses

Loans and loan guarantees

  • $500 billion in loans, loan guarantees, and support for credit facilities for hard-hit industries, such as airlines and other “eligible businesses.” This support will be provided as follows:
    • $25 billion for passenger air carriers and certified repair stations
    • $4 billion for cargo air carriers
    • $17 billion for businesses critical to maintaining national security
    • $454 billion for other businesses, states and municipalities
  • For air carriers, certified repair stations and national security businesses receiving loans:
    • No stock buybacks, and no dividend payments or capital contributions with respect to common stock for 12 months after the loan/loan guarantee is no longer outstanding
    • Until September 2020, to extent practicable, businesses must maintain employment levels as of March 24, 2020 — but in any event shall not reduce by more than 10 percent
    • Must be a U.S. company (organized in the U.S. with significant operations and majority of employees in the U.S.)
    • Government must receive a warrant, equity interest, or senior note in exchange for loan or loan guarantee
    • Compensation freeze — at no more than 2019 compensation amount — for employees earning more than $425,000 in 2019, and additional limits for employees with 2019 compensation exceeding $3 million

Loans and loan guarantees for all other businesses:

  • All other businesses whose operations are jeopardized by the coronavirus may apply for (“Indirect”) loans and other credit assistance through the Federal Reserve, with all credit backed by the Treasury.
  • Similar restrictions in place for direct loans to air carriers and national defense businesses (as above) apply, but can be waived by the Secretary of Treasury; requirement of being U.S. business not waivable
  • If Secretary waives executive compensation limits for any borrower, the Secretary must provide an explanation to Congress and make him/herself available to explain the reasons for such waiver
  • Optional Sub-Program in this category to support for midsized businesses (500-10,000 employees), including nonprofit organizations, borrowers making use of these loans must abide by conditions—
    • Loans capped at 2% annualized interest rate
    • No principal interest due for the first 6 months
    • Must be used to retain 90% of recipient’s workforce as of February 1, 2020
    • Must be domiciled in the U.S.
    • No offshoring jobs for two years after paying off loan
    • No abrogating existing collective bargaining agreements for two years after paying off loan
    • Must remain neutral in any union-organizing effort for term of loan
  • Special Inspector General to be appointed by President and confirmed by Senate to provide oversight of the loan and loan guarantee program
  • Congressional Oversight Commission consisting of four members: one each appointed by Speaker of House, House Minority Leader, Senate Majority Leader and Senate Minority Leader; chairperson appointed by Speaker and Senate Majority Leader
  • No forgiveness whatsoever for the principal amount of any loan or loan guarantees issued

Grants to air carriers

  • $32 billion in financial assistance for the exclusive use of employee wages, salaries and benefits provided as follows:
    • $25 billion for passenger air carriers
    • $4 billion for cargo air carriers
    • $3 billion for airline contractors
  • Similar restrictions apply that are applied to loans and loan guarantees
  • Funding allocated in amounts equal to salaries and benefits reported by the air carrier for the period from April 1, 2019, through September 30, 2019



  • $150 billion in new emergency funding for hospitals and health providers under the Department of Health and Human Services
  • $100 billion of direct aid to healthcare institutions, including hospitals, public and not-for-profit entities, and Medicare and Medicaid enrolled suppliers
  • No less than $250 million to expand the Hospital Preparedness Program’s support of emergency preparedness, including pathogen treatment centers
  • Clarifies that all testing for COVID-19 is to be covered by private insurance plans without cost-sharing, including those tests without an examination under anesthesia (EUA) by the U.S. Food and Drug Administration (FDA)
  • Provides free coverage without cost-sharing of a vaccine within 15 days for COVID-19 that has in effect a rating of “A” or “B” in the current recommendations
  • Makes clear that doctors who provide volunteer medical services during the public health emergency related to COVID-19 have liability protections
  • Provides hospitals Medicare advance payments so that qualified facilities can request up to a six-month advanced lump sum or periodic payment based on net reimbursement represented by unbilled discharges or unpaid bills
  • Provides $1.32 billion in supplemental funding for fiscal year 2020 to community health centers on the front lines of testing and treating patients for COVID-19

Medical devices

  • Provides approximately $17 billion to the Strategic National Stockpile to replenish medical supplies
  • Provides $3.5 billion for expanded production of vaccines, therapeutics and diagnostics
  • $1 billion for the Defense Production Act to bolster domestic supply chains to ramp up production of personal protective equipment and for federal, state and local health agencies to purchase such equipment
  • Permanent liability protection for manufacturers of personal respiratory protective equipment
  • Allows patients to use funds in HSAs and Flexible Spending Accounts for the purchase of over-the-counter medical products, without a prescription from a physician

Small business provisions

  • $349 billion in loan guarantees and some grants to small businesses and nonprofits to keep workers on payroll and pay rent, utilities, and mortgage
  • Federal guarantee of 100% for small business interruption loans made by 7(a) lenders of up to $10 million through December 31, 2020
    • Maximum loan amount a formula tied to payroll amount
    • A portion of these loans—equivalent to 8 weeks of payroll cost for employees earning up to $100 thousand per year—can be forgiven to the extent there is no workforce reduction
    • Allow businesses with more than one physical location that employs no more than 500 employees per physical location in certain industries to be eligible and is below a gross annual receipts threshold in certain industries to be eligible
  • $17 billion for the Small Business Administration (SBA) to cover 6 months of payments for small businesses with existing SBA loans
  • $10 billion for SBA emergency grants of up to $10,000 to provide immediate relief for small business operating costs

Assistance to individuals and workers

  • All U.S. residents with adjusted gross income up to $75,000 ($150,000 married), who are not dependent on another taxpayer and have a work-eligible Social Security number, are eligible for:
    • $1,200 ($2,400 married) rebate and $500 per child (for families)
    • Full rebates are available to individuals with no income, as well as those whose income is derived entirely from nontaxable benefit programs, such as Supplemental Security Income (SSI) benefits
  • Pandemic unemployment assistance through December 31, 2020 for those who are not eligible for regular unemployment income. The federal government will pick up 100% of the cost.
  • $260 billion of unemployment insurance, $600 per worker per week of unemployment benefits for up to four months for all workers

Business tax provisions

  • Includes deferment of payment obligation of 2020 employer payroll taxes (6.2% Old Age, Survivors and Disability Insurance [OASDI] tax) until the end of 2021 (50%) and the end of 2022 (50%)
  • Allows losses from 2018, 2019 and 2020 to be carried back 5 years, and temporarily removes the taxable income limitation to allow a net operating loss (NOL) to fully offset income
  • Allows corporations to claim 100% of alternative minimum tax (AMT) credits in 2019 as fully refundable and provides an election to accelerate claims to 2018, with eligibility for accelerated refunds
  • Increases the 30% limitation on deductibility of interest expense to 50% of taxable income (with adjustments) for 2019 and 2020
  • Provides a refundable payroll tax credit for 50% of compensation paid by eligible employers — up to $5,000 per employee — to certain employees who remain on the payroll but are not working during the COVID-19 crisis


Direct food- and agriculture-related provisions in the CARES Act total approximately $49 billion.

  • $9.5 billion in assistance for agriculture producers who have been impacted by COVID-19. The funding is allocated specifically for specialty crops, producers who supply local food systems and farmers markets, restaurants and schools, livestock producers, i.e., cattlemen and cattlewomen, and dairy farmers.
  • $14 billion replenishment to the Commodity Credit Corporation allowing the U.S. Department of Agriculture (USDA) to craft an aid package to farmers

Other useful resources we would like to share with you:

Additional analysis of the stimulus legislation will continue to develop over the next few days and weeks and Zurich will continue to work to educate our customers on relevant government action.

By: Deirdre Manna
Senior Vice President, Head of Government and Industry Affairs at Zurich North America

By: Gregg Sheiowitz
Vice President, Head of Federal Affairs at Zurich North America