Jeff Levine

There are provisions in the Coronavirus Aid, Relief and Economic Security (CARES) Act, signed into law Friday, that advisors may want to let their clients know about, according to planner Jeff Levine, lead “financial planning nerd” for Kitces.com and director of advanced planning for Buckingham Wealth Partners.

These provisions may be overlooked amid the bigger parts of the $2.2 trillion law, he said Friday during the Kitces.com webinar “Coronavirus Stimulus Bill – New Rules, Planning Strategies and Opportunities.”

Student Loan Deferral

The law’s student loan deferral, in which no federal payments are required until Sept. 30, 2020, is “going to be one of your action items with clients,” he said, stressing: “You need to get on the phone with clients who have federal student loan payments. Why? Because even though the payments are not required and even though no interest will accrue during this period of deferment, the payments that your clients make are not going to stop unless they stop them themselves. So, they’ve got to contact their loan provider or go online” to stop the payment if they want to take advantage of that option.

Although clients do not have to defer their student loan payment, he noted “it’s an interest-free loan right now” and, “if you’re tight on cash, you definitely should” take advantage of that option.

Clients who you should urge to stop making any loan payments now are those who will qualify for 100% loan forgiveness, including those who work in public service, he said. April through September this year “will count towards meeting the requirements to have that debt abated — so these six months are like six free months towards qualifying for whatever program they’re in,” he pointed out, adding: “If you’re going to have all your student debt waived, why pay more of it now … when it’s all going to go away anyway?”

Therefore, “that would be your highest priority call” to a client, followed by “individuals who need the cash flow and, after that, everybody else on your contact list who you know has student loans,” he said.

Health Care Help

Advisors may want to also make sure their clients are aware of the law’s health care related provisions, he pointed out. For instance, the definition of medical expenses has been expanded under certain medical plans to include over-the-counter medications and menstrual care products, he noted. Medicare beneficiaries and individuals with high-deductible health plans that are health savings account-eligible will also receive no-cost COVID-19 vaccines when available, he noted.

“Another nice call” advisors can make is to let clients know about the law’s provision that Medicare Part D recipients can request up to 90-day supplies of medicine instead of the 30-day supplies that individuals typically get from their pharmacies, he said. Older clients, after all, “may not to want to go out a lot right now” due to that demographic’s high risk of COVID-19 complications, he noted.

Direct Payments

As Levine pointed out last week in a 56-tweet thread about the stimulus bill, he noted during the webinar that Congress is basing how much U.S. taxpayers get in their “recovery rebate” credit for 2020 on how much they reported in their 2018 or 2019 tax return (whichever one is most current), which “creates a number of potential problems.”

The “biggest flaw” is that there are “probably a lot of people out there who did very well in 2018 or 2019 and they may now be out of work because of what’s going on or having hours reduced or they’re furloughed or any number of negative financial consequences could be happening because of what’s going on right now that has no bearing on the fact that they made money in 2018” or 2019, he argued.

“Unfortunately, there is nothing that can be done in this point in time,” he noted. However, if a client’s income remains low throughout 2020, when they file their 2020 tax return, “it’ll be trued up and they’ll get their recovery rebate,” which is “one good aspect” of the law, despite it not helping those who are “desperate” for income right now, he pointed out.

Advisors who have a client that had a high-earning 2018 and a lower-earning 2019 may want to ensure that client files a tax return “as quickly as possible” so that “2019 becomes the most recent year on file with the IRS,” he said. The bad news, however, is that it is difficult to say how much time a taxpayer has to file before the rebate check is sent out, he said.

As he also noted during his tweeting last week, there could be an “absolute nightmare” in store for clients who changed their checking accounts since they last had a tax rebate check sent via direct deposit by the IRS, he said Friday. Individuals will be sent a notice about the payment that will include a phone number to call in case the check does not get delivered, he pointed out, predicting “that switchboard is going to be flooded.”

He suggested advisors tell their clients right now to make sure the IRS has their current mailing address.

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