What the HEALS Act Means for the Next Stimulus

We’re living in a wild world these days—pandemics, social distancing, masks. And now, another stimulus check is probably on the way. Say what? We’ve heard rumblings about it for months, but now we’re one step closer to answers with the government’s latest economic bill: The Health, Economic Assistance, Liability Protection, and Schools (HEALS) Act.

Yeah, it’s a mouthful all right.

So, will we see back-to-work bonuses? What happens to unemployment now? And is there really going to be a second stimulus check? Let’s walk through everything we know so far about the proposed HEALS Act.

What’s in the HEALS Act?

A stimulus check, that’s what.

Oh, there are some other things too, but let’s get real—this thing is front and center on everyone’s minds these days. So let’s dive into the numbers:

The HEALS Act stimulus will be similar to the first round of checks—$1,200 for individuals and $2,400 for married couples. But when it comes to the kids, that’s where things start to change. Under this stimulus plan, you’d get $500 per dependent—no matter their age.¹ That means, for instance, parents with two college-age dependents would qualify for that $500 now (with the CARES Act, only children under 17 qualified).

If passed, the HEALS Act follows the same income requirements as the CARES Act. Stimulus checks would land in your bank account if your adjusted gross income (your income before taxes) is less than $75,000 for each individual, or $150,000 for each married couple filing jointly.² If your income is more than that, your stimulus check amount would be reduced. But again, nothing is set in stone just yet.

And let’s not forget there was an earlier bill (the HEROES Act) proposed back in May, but it didn’t get off the ground after passing the House. They never voted on it in the Senate, and now we have this latest HEALS Act trying to offer up its own answers to everything. Oh, boy!   

Even though so much of this is still up in the air right now, all signs point to the fact that some kind of stimulus is coming. Democrats, Republicans and the president himself have all said they see the need for another stimulus package. And these days, it seems like the stimulus might be one of the few things people can agree on anymore. Still, expect some (aka a lot) of back and forth as they iron out the nitty-gritty details of the next stimulus.

What About Those Back-to-Work Bonuses?

What is a back-to-work bonus exactly? Well, just like it sounds, it’s a cash bonus to encourage people to put on their boots and head back to work. The idea here is to light a fire under people to get them into the workforce again. Earlier in the summer there was talk that back-to-work bonuses would be the next big thing to expect from the latest stimulus bill. Then individual states started taking matters into their own hands.

In Idaho, they gave back-to-work bonuses on a state level to encourage former workers to drop their unemployment check and come back to work. Idaho residents who returned to working full time got a one-time $1,500 bonus, and part-time workers saw a bump of $750.³ Not too shabby!

So, will this happen on a national level? That’s the question. One option tossed around would give a bonus of $450 per week to workers who head back to work.⁴ And now that the extra $600 has come to an end, the government is scrambling to come up with another kind of aid to dish out.

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But so far, this isn’t in the HEALS proposal, so only time will tell if this ends up in the final bill they agree on.

Will the Extra Unemployment Benefits Continue?

They could (if this bill passes), but not in the way they have been. The extra $600 a week ended back in July, and so far, it seems that whatever beefed up unemployment checks are given out from this point on won’t be as generous. Plus, there would be a pretty big gap from the time when the last benefit ended and the new one would begin.

Here’s how it would all play out with the proposed HEALS Act: The extra bump in unemployment money would continue through the end of September—but it would only be $200 weekly (not $600 anymore). Then in October, that $200 would be replaced with a payment totaling 70% of the old salary. But that amount plus the regular unemployment money from the state couldn’t add up to more than $500 per week.⁵

Yep, it’s as clear as mud. But what is clear is that’s a big drop off from the extra 600 bucks people were getting up until now. Another option tossed around back in the HEROES Act was extending the unemployment benefit bonus of $600 through January 2021. But don’t count on that happening . . .

Why? Well, even though getting back to work hasn’t been easy for many, a lot of people really didn’t feel a need to jump back in because they were actually making more by staying unemployed!

According to the National Bureau of Economic Research, two-thirds of workers were getting an unemployment check that was larger than their regular income.⁶ Even though this extra cash was helpful to struggling families, some people were taking advantage and using it as a crutch not to return to work.

Whatever happens, it’s clear both sides of the aisle will have to come together and agree on something when it comes to unemployment. In June, the unemployment rate dropped to just over 11%, which is a sign that things are on the mend.⁷ But 31.8 million people claimed unemployment in the beginning of July, so there’s still a long way to go to get the American people back to work.⁸

Will Payroll Tax Cuts Still Happen?

Nope. It doesn’t look like it. There was talk of a payroll tax holiday (or payroll tax cut) benefit being tossed around, but it’s a no-show in the HEALS Act.

Never heard of a payroll tax holiday before? Yeah, we had to Google it too. It basically means that Social Security and Medicare taxes wouldn’t be taken out of your paycheck. You’d end up taking home more, while your employer would have an easier time making payroll (aka not having to lay people off).

But the real kicker with the payroll tax cut is that only those who have a job right now would even get the benefits from it. Unemployed Americans wouldn’t see any aid from it since they aren’t getting paychecks. And that’s probably why this was left out of the HEALS plan.

So, Will There Be Another Stimulus Check?

That’s the million-dollar question! All signs are pointing to the fact that whatever bill that is officially passed into law will include another stimulus check of some kind. But like we all know, nothing the government does is ever that straightforward or that simple.

The Senate is scrambling to get a vote on this bill before they break on August 7. And if the bill does pass, it could be well into September before you’d see the money. So don’t waste time waiting around for (or expecting) Uncle Sam to cut you a stimulus check.

What to Do With Extra Money

All right, so let’s say you do end up with some extra cash on your hands from the HEALS Act—you’ve got to have a plan for it. Let’s walk through what steps you should take if you end up seeing some extra cash flow from all of this.

If you’re unemployed right now (or know a job loss is coming), then you’re in storm mode. That means you pause whatever Baby Step you’re on and pile up cash until the coast is clear. Get on a budget and make sure any money coming in goes toward your Four Walls—food, utilities, shelter and transportation. Those four necessities are where you need to focus all of your energy (and money!) so you can make it through to fight another day. Make sure those things are covered and keep paying your minimum payments on debts (only if you can). Once the storm has passed and everything is A-okay, then you can press play on your goals and start crushing them again.

If you’re employed and your job is stable, toss the extra money at whatever Baby Step you’re on. Think of the cash as an added bonus that can help launch you toward meeting your goals even faster than you thought you would!

Let’s say you’re on Baby Step 2 (paying off all debt but the house) and you’re attacking your debt with a snowball of about $400 a month. Well, another stimulus check of $1,200 (if that’s the amount again this time) in your pocket means you’d get to fast-forward your payoff date by three whole months. Dang!

But if you’re still not sure what to do with extra money or how to even make ends meet right now, you need a plan—a plan that will guide you on the journey you take from dumping debt to feeling confident with your money. 

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