Approximately five months ago, the seriousness of the coronavirus disease 2019 (COVID-19) pandemic was coming into focus. States were early in the process of developing nonessential business-shutdown plans, and deaths associated with COVID-19 were beginning to tick noticeably higher in the United States. It was this forthcoming physical and financial toll that prompted lawmakers to pass the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27.
The CARES Act failed at the individual level
At $2.2 trillion, the CARES Act stood taller than any previous relief plan to ever be passed in Washington, D.C. For some context, it was nearly triple the cost of the relief plan passed under the Obama administration to prop up banks and the U.S. economy following the financial crisis.
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This boatload of cash was disbursed through a plethora of channels. Approximately $500 billion was used to support distressed industries, with close to $350 billion set aside for payment protection program (PPP) loans to small businesses. Hospitals also received roughly $100 billion, and the unemployment program netted $260 billion to enhance benefits (i.e., the extra $600 payout per week) for a four-month stretch (April 1, 2020 to July 31, 2020).
However, it's the $300 billion allocated for direct stimulus payouts that folks associate most with the CARES Act. In the neighborhood of 160 million Economic Impact Payments were disbursed, with individuals and couples filing jointly able to receive a maximum of $1,200 or $2,400, respectively, depending on their adjusted gross income. Parents or guardians were also eligible to receive $500 for each dependent under the age of 17.
Although throwing money at an unprecedented problem appeared justified in March, the one aspect of the CARES Act that fell flat was its effort to financially support individual workers and seniors. Based on a Money/Morning Consult poll of 2,200 people in late April, nearly three-quarters had spent or expected to spend the entirety of their stimulus money in four weeks or less.
Additional stimulus appears sorely needed, and Capitol Hill is currently (as of Wednesday evening) knee-deep in paperwork to make another stimulus deal a reality.
Surprise, the next stimulus deal might actually save you money
While a final deal will likely blend key aspects of the Democrat-proposed HEROES Act and the GOP-backed HEALS Act, what you might find surprising is that, in addition to the next stimulus bill outlaying big bucks, it might also save people money in a variety of ways.
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A temporary freeze on Medicare Part B premiums
Senior citizens and most Social Security recipients could see a nice surprise as part of the next stimulus deal, with the HEALS Act calling for a one-year freeze on Medicare Part B premiums.
Today, more than 60 million people are enrolled in the Medicare program, with many paying the $144.60 standard monthly premium for Part B (i.e., outpatient services). Most years, Medicare's Part B monthly premium cost will increase to reflect the rising cost of medical-care services. But rapidly rising medical-care premiums can be a scary thing when the U.S. economy is in a recession or when Social Security's cost-of-living adjustment (COLA) is creeping higher by a negligible amount.
Thankfully, about 70% of Medicare Part B enrollees are also Social Security recipients of longer than a year and are therefore protected by the hold harmless provision. This provision ensures that Medicare Part B premiums can't rise at a faster rate than Social Security's COLA.
However, a provision in the HEALS Act specifically calls for a freeze on Medicare Part B premiums for 2021, no matter what happens with Social Security's COLA or inflation, in general. If no COLA is passed along, Part B premiums wouldn't have gone up anyway, but this stimulus provision would hammer home the idea that seniors wouldn't pay more for Medicare Part B premiums in 2021.
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A full tax deduction on business meals
Another cost-saving initiative you'll find in the HEALS Act is the Supporting America's Restaurant Workers Act, which was introduced by Republican Sen. Tim Scott of South Carolina. Scott's bill would increase the existing business meal deduction from 50% to a temporary tax deduction of 100%.
The purpose of Scott's provision is simple: Get people back into restaurants, which have been among the hardest-hit industries. According to data published by online reservation service OpenTable, seated diners from online, phone, and walk-in reservations were down anywhere from 53% to 66% in the U.S. every single day for the past month, relative to the prior-year period. By offering an incentive to do business in restaurants or provide business stipends to eat in restaurants, Scott is hoping to drum up business for the industry and get dining employees back to work.
However, even if Scott's provision makes it into the final stimulus bill, it's unclear just how much it'll move the needle for restaurants. A weekly Morning Consult survey that gauges consumers' comfort levels with going out to eat has been stuck right around the 34% mark for six straight weeks (through Aug. 4, 2020). This is to say that two-thirds of those surveyed wouldn't feel comfortable dining in a restaurant at the moment.
But if you're among the one-third who are comfortable eating out, a bigger tax deduction may await.
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A liability shield for businesses
A third and final way the next stimulus deal could save people money is through a liability shield for businesses.
When Senate Majority Leader Mitch McConnell (R-Ky.) introduced the HEALS Act, the one provision he was adamant about that wasn't negotiable was the Safe to Work Act, which protects businesses and other entities (such as hospitals and schools) from being sued over coronavirus infections. To be clear, people could still sue and win if they can prove a business or entity was grossly negligent in failing to follow local, state, or federal health guidelines. But the main gist of this GOP-backed provision is that it would protect businesses for a five-year period from an onslaught of frivolous COVID 19-related lawsuits.
Though the Safe to Work Act isn't going to directly save a majority of Americans money, it's going to protect businesses from facing a major uptick in legal expenses. That means the possibility of not having to cut back on staff, wages, or hours worked. It also means less of a chance that self-proprietor business owners will go bankrupt from coronavirus-related lawsuits.
All this means is that there are a lot of ways to potentially save money if/when the next stimulus deal is signed into law.
