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Today President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Act) in order to combat the economic consequences of the novel coronavirus pandemic. The Act includes more than $2 trillion in stimulus funds and other aid, such as provisions for expanded unemployment insurance; aid to both large and small businesses, as well as states; and cash payments to households. It also includes provisions to expand access to medical services and provide greater flexibility for retirement plan participants to access loans and qualified distributions and other measures that impact the funding and administration of employee benefit plans. Below is a summary of some of the provisions of the Act most applicable to businesses in their role as employers and sponsors of employee benefit plans.

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Payroll Tax Deferrals and Employee Retention Tax Credit for Employers Subject to Closure by COVID-19 and Related Orders

The CARES Act provides individuals greater access to their retirement plan benefits during these challenging times and permits individuals to delay required distributions. In addition, it allows defined benefit pension plan sponsors relief for funding obligations arising during the 2020 plan year.

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The CARES Act includes a number of provisions to expand coverage for COVID-19 diagnostic testing, accelerate the timeline for covering newly recommended COVID-19-related preventive care, allow high deductible health plans to provide first-dollar coverage of telehealth services, and allow the use of various health care spending or reimbursement accounts to purchase over-the-counter (OTC) medicines and feminine care products without a prescription.

Tax-Qualified Employer Payments of Student Loans

In addition to other forms of student loan relief, the CARES Act amends the Code § 127 rules to permit employers to provide up to $5,250 in tax-qualified student loan repayment benefits to employees under a Section 127 Education Assistance Program. Payments could be made directly to a lender or to the employee. The benefit is generally subject to the other rules applicable to Education Assistance Programs, as described in Code § 127, including the requirement that there be a written plan document. Amounts provided to an employee under this new benefit will reduce the amount of any student loan interest deduction the employee otherwise would be eligible to claim.

M. Scott Young 513.352.6617 <a href="mailto:Scott.Young@ThompsonHine.com">Scott.Young@ThompsonHine.com</a>

Anthony P. McNamara 513.352.6657 <a href="mailto:Anthony.McNamara@ThompsonHine.com">Anthony.McNamara@ThompsonHine.com</a>

David Whaley 513.352.6681 <a href="mailto:David.Whaley@ThompsonHine.com">David.Whaley@ThompsonHine.com</a>

Beth A. Mandel 513.352.6695 <a href="mailto:Beth.Mandel@ThompsonHine.com">Beth.Mandel@ThompsonHine.com</a>

Alexis J. Kim 216.566.5732 <a href="mailto:Alexis.Kim@ThompsonHine.com">Alexis.Kim@ThompsonHine.com</a>

or any member of Thompson Hine’s <a href="https://www.thompsonhine.com/services/labor-amp-employment">Labor &amp; Employment</a>, <a href="https://www.thompsonhine.com/services/employee-benefits-amp-executive-compensation">Employee Benefits &amp; Executive Compensation</a> or <a href="https://www.thompsonhine.com/services/tax">Tax</a> groups.

ADDITIONAL RESOURCES

We have assembled a firmwide multidisciplinary task force to address clients’ business and legal concerns and needs related to the COVID-19 pandemic. Please see our <a href="https://www.thompsonhine.com/services/covid-19-task-force">COVID?19 Task Force web page</a> for additional information and resources.

This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgment of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel.

This document may be considered attorney advertising in some jurisdictions.

Federal CARES Act Provides Substantial Relief to Employers from Effects of COVID-19

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