How To Manage Financially During The Coronavirus

The coronavirus has dramatically disrupted our economy and society in a matter of a few short weeks. While it’s hard to find something positive in all of the tragic headlines, we think it’s important to recognize that public and private sectors have put forth a massive level of support in a very short time. More assistance is likely on the way, but here’s what you need to know now if you’re affected by the coronavirus (COVID-19), whether you’re an employee, an employer or retired.

What If You’re Employed, But Unable To Work?

The Families First Coronavirus Response Act (FFCRA) was recently passed to help provide paid leave to employees impacted by COVID-19 and who are unable to work due to sickness or caring for others. While this Act is welcome and will hopefully help many people impacted by the coronavirus, its scope is dependent upon your employer. For example, the Act only applies to employers with fewer than 500 employees. Additionally, small businesses with fewer than 50 employees will be exempt from requirements if they would jeopardize the viability of the business. Some, but not all, public employees are covered. Per The New York Times, we believe part-time and ‘gig economy’ workers (e.g., Uber and Lyft drivers) are eligible. Federal workers, specifically, only benefit from the two weeks of paid sick leave provisions as outlined below. The benefits (if you’re covered) include:

• Two weeks (up to 80 hours) of paid sick leave at your regular pay (up to $511 per day) if you are unable to work because you’re in quarantine (per government order or health care advice), and/or experiencing COVID-19 symptoms and seeking a medical diagnosis, or
• Two weeks (up to 80 hours) of paid sick leave at two-thirds of your regular pay (up to $200 per day) if you are unable to work because you’re caring for an individual ill from COVID-19, under quarantine for COVID-19, or have a child (under age 18) whose school or child care provider is closed or unavailable due to COVID-19, and
• Up to an additional 10 weeks of paid expanded family and medical leave at two-thirds of your regular pay (up to $200 per day) if you’ve been employed for at least 30 days, and you’re unable to work due to a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable due to COVID-19.

If you’re unable to work due to coronavirus, and you are not covered by the provisions of FFCRA, suggestions include:

• Utilize sick and vacation leave available to you.
• If you don’t have adequate leave, ask your Human Resources department if there’s a shared leave program where other employees can donate leave to you.
• Contact your unemployment office to ask about benefits and options available to you.

What If You’ve Been Furloughed?

Many employers are furloughing employees, meaning that they are suspending pay, but keeping employees in the payroll system to receive benefits, such as health insurance. If you’ve been furloughed, contact your Human Resources department to ask what benefits are still available to you, including health insurance and any paid or vacation leave. If you are not receiving pay, you should also contact your unemployment office to determine if you can begin receiving benefits. Unemployment benefits were recently expanded, offering larger benefits for longer periods.

What If You’ve Been Laid Off or Terminated?

If your employer has let you go, you should contact your unemployment office to begin receiving benefits. You can also look for alternate employment opportunities. If you’re young and in good health, you might explore a surge in hiring demand at grocery stores, pharmacies and hospitals.

What If You’re Self Employed?

The CARES Act thankfully includes Pandemic Unemployment Insurance which extends unemployment benefits to people who ordinarily wouldn’t qualify for unemployment benefits (such as self-employed individuals).

What If You Can’t Pay Your Bills?

We recognize that many Americans’ incomes will be impacted, perhaps even if you’re still working. We therefore offer the following suggestions on how to navigate your finances during this challenging time.

• Trim Your Expenses The first thing to do is stop elective payments such as contributions to your kids’ college savings accounts. Conserve your resources to focus on your immediate bills versus longer term savings. Also, look for ways you can cut back on your bills, like suspending or stopping elective memberships and other discretionary expenses.
• Carefully Consider Filing Your Taxes Everyone should be preparing their taxes to determine if they’re due a refund, or if they owe money. If you’re due a refund, file quickly. If you owe money, investigate how long you can delay filing. The IRS has extended the Federal 2019 filing and payment deadlines until July 15, 2020, but every state is different in regard to their deadlines.
• Look for Loan and Payment Relief Government and private businesses alike realize that millions of Americans are going to be facing financial hardship. Widespread efforts have already begun to help reduce financial pressure during this time. Contact every organization to whom you owe a payment to determine if they are implementing programs to help during COVID-19. Some specific examples include, but are certainly not limited to:
  • Housing Contact your mortgage lender or landlord to inquire about a temporary pause on housing payments. The Federal Housing Finance Agency is providing payment forbearance to borrowers impacted by the coronavirus for up to 12 months due to hardship. Contact your mortgage company to ensure you’re covered and take necessary steps to qualify.
    Additionally, Freddie Mac has implemented a program offering relief to multi-family landlords, allowing payments to be delayed for 90 days in return for not evicting any tenants. Further, the Federal government, many states and localities are imposing restrictions and suspensions on evictions.
  • Student Loans The recent CARES Act includes a provision to let student-loan borrowers suspend making payments. Payments can be deferred until September 30, 2020. Be sure to contact your loan provider to initiate deferral.
  • Utilities & Communications Many utility and communication providers are extending service continuation if you’re not able to pay your bill. Contact your provider to determine timeframes and any actions required to ensure you retain service.
• You Might Be Receiving A Stimulus Check The recent stimulus bill includes direct payments to a number of Americans if you qualify based upon income. Individuals should receive $1,200, married couples $2,400 and parents should receive $500 for each child under age 17. However, payments phase out for individuals with adjusted gross income of more than $75,000, with no benefits for those making more than $99,000. These limits are doubled for married couples. We believe eligibility will be based upon your 2019 tax return, if filed, or otherwise upon your 2018 tax return. The timing of payments is yet to be determined, and could vary, but checks will hopefully be received by May.
  Note: If you’ve changed your address since your last tax filing, be sure to update it with the IRS (using Form 8822) to ensure proper receipt.
• Utilize Your Emergency Reserves And Develop A Plan Forward To the extent you have emergency reserves, utilize those resources. This is why you have a rainy-day fund! However, also begin exploring ways to access capital on a proactive basis. Options might include:
  • Tap Into Your Investments: Hopefully your investments include a mix of assets, including bonds for capital preservation. If yes, consider tapping into these resources and make sure your investments are properly positioned relative to your potential cash needs. Depending upon your investment accounts, funds can be withdrawn from:
    • Non-Retirement Accounts: Funds can be withdrawn from non-retirement accounts with possibly only paying capital gains taxes, if any taxes apply.
    • Roth Accounts: You might be able to withdraw your contributions from Roth accounts without any tax impacts.
    • Retirement Accounts: Distributions from IRAs, 401(k)s and other similar retirement accounts could trigger taxable income. Ordinarily, a 10% penalty is imposed if you’re age 59 ½. However, this penalty is currently waived for aggregate distributions up to $100,000 taken out between January 1, 2020 and December 31, 2020, if:
      • You, a spouse or dependent have been diagnosed with COVID-19.
      • You’ve experienced adverse financial consequences as a result of being quarantined, furloughed, laid off or having work hours reduced because of COVID-19.
      • You’re unable to work because a lack of childcare due to COVID-19.
      • You own a business that closed or operated under reduced hours because of COVID-19.
    • Furthermore, if a distribution is taken for the reasons outlined above, it can be repaid over 3 years (effectively rolling it back into your plan), and the taxes due on the distribution can be paid over 3 years.
      Another option is to take a loan from your employer retirement plan. Maximum loan amounts were recently increased to $100,000 (up from $50,000), and payments on plan loans may be delayed for one year.
  • Contact Your Bank: A swath of banks have been reaching out to customers announcing their preparedness to help during the coronavirus. Contact your bank to see what options are available to you.
  • Draw On Your Home Equity Line: If you have a home equity line of credit, confirm that resources are available to you, or consider opening a home equity line.
• Seek Government Resources And Community Help If you’re facing financial struggles, expand your search to more local government and community resources that might be available to help you and your family. Food assistance programs are expanding, including both the Supplemental Nutrition Assistance Program and the Child Nutrition Program. Most schools are also offering meals to children, even while school is out of session, for millions of youth.
  In addition to checking with government options and schools, try contacting your local Community Foundation for suggestions on organizations in your area that might be able to address your needs. Many religious organizations are also offering help.

Medicare Updates

Medicare is making adjustments in response to COVID-19, including:

• Medicare covers the lab tests for Covid-19. You will not be subject to out-of-pocket costs.
• Medicare now allows prescriptions to be filled for a 90 day period.
• Medicare has temporarily expanded telehealth coverage to help minimize social interactions for medical care.

SageVest Wealth Management cares about our clients, our community and our country. We encourage you to share these resources with anyone you know who is impacted by the coronavirus. If you’re a business owner, or know a business owner affected by coronavirus, be sure to share our Financial Help For Business Owners During The Coronavirus. Also, if you’re looking for ways to help during the coronavirus, check out our Tips For Helping Others During Coronavirus and How Kids Can Give And Help During Coronavirus. Finally, financial downturns can sometimes present silver linings. Check out our list of Financial Opportunities During Financial Downturns and feel free to Contact Us for assistance.