7. Federal student loan payments, interest waived
On March 13, the president announced that interest would be waived on federal student loans. Legislation codifying that order is retroactive to March 13. Learn more at Studentaid.govOpens in a new window.
The CARES Act suspends payments on federal student loans for 6 months. The act waives any interest on the loans for 6 months as well.
The missed months of payments will be recorded as if the borrower had made a payment for the purposes of loan forgiveness programs.
The act makes emergency financial aid available to some students, up to the amount of the maximum Federal Pell Grant for the year.
Federal work-study payments can be made to qualifying students who have been unable to complete their work under the program due to COVID-19.
Students who are forced to withdraw from school due to the outbreak may have the portion of their loan covering that semester canceled. Requirements to return portions of grants or loan assistance will be waived for students who had to withdraw from school as well.
A provision in the CARES Act provides an income tax exclusion for individuals who get student loan repayment assistance from their employer for a limited period of time.
At the K–12 level, states may apply to waive certain federal education requirements for this school year.
8. More funding available for health care and expanded coverage
Testing for COVID-19 must be covered by private health insurance without cost sharing. Any vaccines for COVID-19 must be covered as well without cost sharing.
The CARES Act provides funding for health care providers and suppliers, including extra Medicare payments to hospitals to cover COVID-19 treatment and extra funding to community health centers.
The act expands coverage of telehealth services under Medicare. It also allows high-deductible health plans with health savings accounts (HSAs) to cover telehealth services even if patients have not met their annual deductible.
For health savings accounts, health flexible spending accounts, and health reimbursement arrangements, the act includes over-the-counter (OTC) medicines (without a prescription) and feminine products as qualifying medical expenses that can be reimbursed by these accounts.
9. Above-the-line deduction for charitable contributions
The CARES Act allows for a $300 above-the-line deduction for cash charitable contributions made to 501(c)(3) organizations for taxpayers who take the standard deduction.
The act also relaxes the limit on charitable contributions for itemizers—increasing the amount that can be deducted from 60% of adjusted gross income to 100% of gross income.
These changes go into effect beginning in the 2020 tax year.
Both of these provisions explicitly exclude enhanced deductions for contributions to 509(a)(3) charitable organizations (commonly known as sponsoring organizations) or donor advised funds.