KY Policy Blog

What’s in the HEROES Act for Kentucky

By Dustin Pugel and Jason Bailey
May 22, 2020

The U.S. House of Representatives has passed the HEROES Act, a bill that would provide the kind of substantial economic relief Kentucky and other states need in the face of the COVID-19 recession. The Senate must now join the House and agree to a relief package that adequately supports families, governments and businesses through this crisis and sets the stage for a robust economic recovery when the pandemic is eventually behind us.

Here are what major elements of the HEROES Act would mean for Kentucky:

Substantial relief to state and local governments

A major component of the HEROES Act is significant fiscal relief for state and local governments totaling nearly $1 trillion over two years. Kentucky’s state budget would receive aid in two forms:

Flexible state grants. The bill contains a Coronavirus State Fiscal Relief Fund that would provide direct aid to Kentucky’s budget of $3.3 billion in federal fiscal year (FFY) 2020 and an additional $4.1 billion in FFY 2021 for a total of $7.4 billion. This larger amount than what was provided in the CARES Act is more appropriate given the size of Kentucky’s expected budget hole, and unlike in the CARES Act this aid can be used to help states make up for cratering revenues.

A further increase in the match for Medicaid. The Families First Coronavirus Response Act, enacted in March, boosted the federal share of spending on the Medicaid program (known as the FMAP) by 6.2 percentage points from Jan. 1, 2020 until the Secretary of Health and Human Services ends the official public health emergency. That increase was expected to lower Kentucky’s portion of Medicaid spending by $520 million. The HEROES Act would extend that increase at least through June 30, 2021 and raise the FMAP by another 7.8 percentage points beginning July 1, for a total increase of 14 percentage points from July 1, 2020 through June 30, 2021. This change would lower Kentucky’s share of Medicaid spending by a total of $1.7 billion over the 18 month period, helping protect health care for Kentuckians as well as other critical services provided by the state.

Local governments of all sizes would also receive a substantial amount of general fiscal relief to help deal with COVID-19-related revenue losses. Nationally, HEROES provides $384.5 billion for over 39,000 cities, counties and other local governments. In Kentucky, all 120 counties would receive a total of $2.5 billion, and 429 cities and other local government entities would receive $1.9 billion over two years.

Supports for workers and families

Important unemployment insurance provisions extended

The HEROES Act would extend important provisions of the CARES Act that provided unemployment insurance (UI) benefits to more workers as well as an additional $600 weekly benefit for all recipients.

The former provision, known as Pandemic Unemployment Assistance (PUA), is the UI benefit for independent contractors, gig workers and others who do not typically qualify for UI. The HEROES Act allows for new PUA applications for a month longer than the CARES Act (through January 2021) and for benefits to be paid out through March 2021.

Pandemic Unemployment Compensation (PUC) is the federally-funded $600 weekly benefit for both UI and PUA claimants, and is set to expire on July 31, 2020 under the CARES Act. In order to avoid that cliff for unemployed workers and the economy, the HEROES Act moves the expiration six months out to expire at the end of January 2021. In Kentucky, as of the week ending May 16, PUC has meant over $900 million extra is already owed to jobless Kentuckians who have filed continuing claims.

Another, larger round of stimulus payments to individuals and families

In an effort to help individuals and families meet basic needs while also supporting the economy by keeping up spending, under HEROES $1,200 in direct cash payments would be made to each adult and each child (for up to 3 children) in a household. This means the maximum potential payment for a family would top out at $6,000. The stimulus would phase out by 5 cents for every dollar of income above $75,000 for individual tax filers, $112,500 for single parents and $150,000 for married households.

Unlike the first round of stimulus checks, the stimulus would be available to working immigrant households who pay taxes with an Individual Taxpayer Identification Number. It also retroactively applies the CARES Act stimulus to these households. In Kentucky, this measure would benefit 53,520 people, amounting to an additional $41.2 million in CARES and $64.2 million in HEROES stimulus payments

An estimated 96% of adults and 97% of children in Kentucky would benefit from the stimulus payments in the HEROES Act. This includes 130,000 dependents aged 17 to 24 in Kentucky who did not previously qualify for CARES Act payments. The total combined value of these benefits would be just under $5 billion for households across the state.

Boost to food and housing assistance

Because the direct cash payments still won’t be enough for many who were already struggling before the crisis, the bill provides some additional, critical benefits aimed at low-income households. The first is a modest but important 15% increase in food assistance through the Supplemental Nutrition Assistance Program (SNAP). SNAP is not only an excellent tool to fight hunger and improve health, but also a critical tool to reducing more widespread economic harm during downturns. Currently nearly 600,000 Kentuckians receive food assistance through SNAP.

Three other provisions are specifically aimed at reducing and preventing homelessness. The act provides $100 billion in assistance nationally to help with rent, utilities and other housing-related costs. Additionally, for people without a home, it includes $11.5 billion for emergency services such as paying for hotel rooms, temporary shelter reconfigurations, and health services, and $4 billion for additional housing vouchers. As of the last count required by the federal government (which took place before the pandemic), Kentucky had more than 4,000 individuals who were unhoused (generally considered a low-estimate of true homelessness), and housing affordability has long been a significant problem in the commonwealth.

Health care improvements to keep people insured

In addition to the increased share in federal funding for Medicaid, the HEROES Act provides other supports to keep people insured during the pandemic. For example, it provides subsidies for COBRA premiums so that those who might otherwise lose their employer-sponsored insurance after being laid off can get help with the typically high premiums. So far in Kentucky, an estimated 228,300 people have lost coverage after being laid off.

The act also gives states the option of using Medicaid to cover COVID-19 treatment for uninsured patients, and establishes special enrollment periods for Medicare beneficiaries and individuals seeking coverage through the Affordable Care Act (ACA) exchanges.

Improvements to essential worker pay and safety

The HEROES Act also takes an important step toward fairly compensating the millions of workers nationwide, and hundreds of thousands of Kentucky workers, who continue to put their health at risk while serving in frontline occupations. It creates a $200 billion “COVID-19 Heroes Fund” fund that would reimburse employers for providing a hazard pay supplement — an additional $13 an hour — to essential workers, applied retroactively from January 27 until the end of the crisis. The bill defines “essential worker” as a health sector employee, an emergency response worker, a sanitation worker, a worker at a business that a state or local government official has determined must remain open, and any other worker who cannot telework and that the state deems to be essential during the emergency.

The bill also takes important steps to make working conditions safer for these employees. It requires the Occupational Safety and Health Administration (OSHA) to issue a strong and enforceable standard to require all workplaces to develop and implement infection control plans within seven days of passage based on Centers for Disease Control and Prevention (CDC) guidance. The proposal also keeps employers from retaliating against workers who report virus-related safety issues.

Other vital assistance

The HEROES Act includes other important elements including:

  • $75 billion for COVID-19 testing, contact tracing and other activities to mitigate and stop the spread of the virus.
  • An employee retention tax credit that encourages businesses to keep employees on payroll, along with expanded monies for small businesses and nonprofits.
  • An increased and fully refundable child tax credit for all children throughout 2021.
  • The expansion of eligibility for paid leave under Families First to workers at all companies regardless of size, for more reasons related to COVID-19 and through Dec. 31, 2021 (under Families First it ends Dec. 31, 2020).
  • An additional $7 billion to provide care for children of essential workers (building on the $3.5 billion in the CARES Act).
  • Funds to improve access to internet access, including to close the “homework gap” by providing funding for Wi-Fi hotspots and connected devices.
  • An expansion and extension of the temporary student loan interest and payment relief to federal borrowers in the CARES Act — as well as the cancelation of student debt for borrowers who were victims of predatory schools and the provision of debt reductions to a group of distressed borrowers.
  • Funds to protect the U.S. Postal Service.
  • An additional $100 billion in the health care provider relief fund.

What’s missing

Although the HEROES Act would go a long way in providing critical forms of relief from the pandemic, there are some areas missing. Most importantly, the bill does not automatically continue relief until the economy has fully recovered. That creates the potential for another crisis down the road if the economy remains weak when the aid ends.

Still, the HEROES Act is the kind of aid communities in the commonwealth and across the nation need now as they cope with historic unemployment and cratering state and local tax revenues that threaten to worsen the recession. The Senate must come to the table and pass a package that is adequate to address the nation’s enormous economic challenge.

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