Coronavirus (COVID-19) Impacts on Financial Wellness – Updates

The Coronavirus (COVID-19) pandemic has caused immense turmoil in global financial markets. We’ve collected some information here that we think everyone should know and that answers some of the questions we’ve been fielding frequently. We’ll update the information on this page as necessary, so you can check back often. (This page was last updated 4/1/2020)

1) Taxes Treasury Secretary Mnuchin announced in late March that the filing deadline and payment deadline for federal taxes have been moved to July 15, 2020. The IRS website has more information here: https://www.irs.gov/coronavirus. If you are expecting a refund, there is no reason to delay filing your taxes. The deadline to contribute to an IRA or HSA for the 2019 tax year is also extended to July 15, 2020. State tax deadlines are not affected by this announcement, but many states have already extended their deadlines and more may follow after the federal announcement. Check with your state tax authority before delaying filing your state return. (last updated 4/1/2020)

Previously Treasury Secretary Mnuchin announced March 17 that Treasury and the IRS are extending the tax payment deadline by 90 days, to July 15. This did not apply to the filing deadline, but this is no longer the case and the Federal filing and payment deadline were both extended. See update above.

2) Your 401(k) (or IRA or other investments). There’s a lot of advice out there right now. Some say to cash out, some say now is the time to “buy buy buy”. We are not investment advisors so we have no official opinion on market timing. We will just remind you that long term investing is just that, long term. The consensus of market professionals is that the best approach for most people is to stay the course, don’t make panic driven decisions.
(last updated 3/19/2020)

3) HSAs.  The IRS released guidance earlier this month that allows HDHPs (High Deductible Health Plans) paired with HSAs to cover the full cost of COVID-19 testing without requiring participants first meet their deductible. The guidance doesn’t require that insurer do so, it allows them the option. If you have a HDHP paired with an HSA, check with your insurer to see if they will be covering the full costs of testing before you meet your deductible. CDC guidelines recommend calling your healthcare provider prior to seeking testing on your own. As noted in the Tax section, your window to contribute to an HSA for the 2019 tax year has been extended to July 15, 2020. More information here:  https://www.cnbc.com/2020/03/11/irs-high-deductible-plans-can-cover-coronavirus-testing-costs.html   (last updated 4/1/2020)

4) Mortgage Refinancing. We’ve fielded a lot of questions about refinancing after the Federal Reserve cut interest rates to essentially zero earlier this week. The short answer to this is that mortgage rates (including refinancing rates) are not directly tied to the Federal Reserve target rate. They often move in the same direction but there are many complicating factors and there is no guarantee that rates will drop immediately (likewise there is no guarantee they won’t). Currently an increased interest in refinancing (likely due to the rate cut news) seems to have kept mortgage rates from dipping too much because of the increased demand initially. As that demand has subsided and more Fed programs have rolled out to stabilize the market rates have begun to drop again. The same general rules apply: consider refinancing if you can improve your rate by at least 0.5% and don’t forget to account for the closing costs of refinancing.  More information here: https://money.yahoo.com/why-you-cant-get-low-mortgage-rate-201205117.html (last updated 4/1/2020)

5) Federal Student Loans. The CARES act, passed March 27, 2020, provided payment and interest relief for people with federal student loans. Most importantly borrowers with qualifying federal student loans (more below on that) can cease making payments for 6 months, until September 30, 2020 with no penalty. Interest will not accrue, and this suspension period will count as valid payments for any loan forgiveness or rehabilitation programs, and will not count as missed payments for credit reporting purposes. You do not have to request to be included in this program, it is automatically applied to all qualifying borrowers. It is not clear right now what this means if you have enrolled in automatic payments – so to be on the safe side if you want to halt your payments check with your loan servicing provider or halt the automatic payments on your account.
This does not apply to private student loans, only federal. It also does not apply to Perkins or FFEL loans, even though those programs were federal programs.
You should receive notice if the payment suspension applies to your loans within 15 days of the passing of the Act, so keep an eye out for yours. If you’re not sure what type of loan you have, don’t assume your payments are suspended, contact your loan servicer for confirmation. There are more details here: https://www.usnews.com/education/blogs/student-loan-ranger/articles/coronavirus-stimulus-things-student-loan-borrowers-should-know

Previously the Department of Education announced an interest freeze on federal student loans and the option for borrowers to request an administrative forbearance for “at least 60 days.” This information has now been superseded by the CARES Act information above, which provides more generous forgiveness options.

6) Be Careful. This isn’t another reminder to practice social distancing. Anytime there is fear and uncertainty there are people willing to take advantage of it. Please be aware that there will likely be an increase in COVID-19 (Coronavirus) scams and frauds as this situation develops. Our tips for detecting and stopping a scam in its tracks apply here too. It’s worth reviewing them here. News is coming fast so be sure to confirm everything independently before acting. You can always, always reach out to a BrightDime coach via in-app chat or at help@brightdime.com for help if you’re not sure something is legit. The FTC has more information on these scams here: https://www.consumer.ftc.gov/blog/2020/02/coronavirus-scammers-follow-headlines (last updated 3/19/2020)