Today, in response to COVID-19, Congress finalized the CARES Act, a massive financial relief package designed to tide the U.S. economy and its strained healthcare sector over for the next few months. In terms of tax relief and benefits for O&P, the bill:
- Carves out $350 billion in aid for small
businesses, much of which would be in loans through the Small Business
Administration (SBA) and banks, guaranteed by the federal
- The loans would be forgiven provided the businesses meet certain requirements, including limiting reductions in pay and layoffs, though with some flexibility for employers. (Applicants must make good faith certifications that coronavirus has impacted their business and that the loan is necessary for continuation of their business.)
- These loans can be used to cover payroll expenses, including salaries and compensation; various forms of paid sick, medical or family leave; group health insurance premiums; state and local taxes assessed on employee compensation; rent; utilities; and interest paid on debt.
- Applicants that previously received a loan from another source for the same purpose are not eligible.
- Companies that secured an SBA loan since January 15, 2020 can refinance those recent loans under the terms and conditions of the special SBA coronavirus relief loans.
- Language added late in the process ensures that an inspector general and congressional oversight committee (with members yet-to-be-determined) oversee how the money is spent.
- This funding is in addition to the significant assistance provided in legislation previously passed by Congress, which authorizes approximately $2 billion worth of 100 percent guaranteed SBA loans, a portion of which SBA will forgive based on allowable expenses for the borrower. SBA is already accepting applications for these funds.
- Provides a refundable payroll tax credit for 50 percent of wages paid by employers to employees during the COVID-19 crisis. The credit is available to employers whose gross receipts declined by more than 50 percent when compared to the same quarter in the prior year. The credit is based on qualified wages paid to the employee. For employers with greater than 100 full-time employees, qualified wages are wages paid to employees when they are not providing services due to the COVID-19-related circumstances described above. For eligible employers with 100 or fewer full-time employees, all employee wages qualify for the credit, whether the employer is open for business or subject to a shut-down order. The credit is provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee. The credit is provided for wages paid or incurred from March 13, 2020 through December 31, 2020 and is NOT available to employers receiving Small Business Interruption Loans.
- Relaxes the limitations on a company’s use of losses. Net operating losses (NOL) are currently subject to a taxable-income limitation, and they cannot be carried back to reduce income in a prior tax year. The legislation provides that an NOL arising in a tax year beginning in 2018, 2019, or 2020 can be carried back five years. The provision also temporarily removes the taxable income limitation to allow an NOL to fully offset income. Congress hopes that these changes will allow companies to utilize losses and amend prior year returns, which will provide critical cash flow and liquidity during the pandemic.
- Allocates funding to support “short-time compensation” programs, where employers reduce employee hours instead of laying off workers and the employees with reduced hours receive a pro-rated unemployment benefit. This provision would pay 100 percent of the costs they incur in providing this short-time compensation through December 31, 2020.
- Creates a temporary Pandemic Unemployment Assistance program to provide payment to those not traditionally eligible for unemployment benefits (self-employed, independent contractors, those with limited work history, and others) who are unable to work as a direct result of COVID-19. It also creates an additional 13 weeks of unemployment benefits to help those who remain unemployed after weeks of state unemployment benefits are no longer available.
- Authorizes the Treasury Department to provide advance payment of tax credits that are available to private sector employers that are required to provide up to 12 weeks of coronavirus-related paid leave to their employees.
- Clarifies the limitation on compensation during paid sick days, stating an employer shall not be required to pay more than $511 per day and $5,110 in the aggregate for sick leave or more than $200 per day and $2,000 in the aggregate.
In terms of healthcare provisions, the bill:
- Temporarily lifts the Medicare sequester, which reduces payments to providers by two percent, from May 1, 2020 through December 31, 2020.
- Directs the Secretary of Health & Human Services to develop a comprehensive and coordinated plan to identify workforce projection needs.
- Prevents scheduled reductions in Medicare payments for durable medical equipment subject to competitive bidding. (This does not impact the January 1, 2021 scheduled implementation of Medicare competitive bidding for off-the-shelf orthoses.)
- Finally, AOPA was able to include language in the bill to ensure Veterans can receive care from their choice of practitioner throughout the crisis. Specifically, the bill says “The Secretary of Veterans Affairs shall ensure that, to the extent practicable, veterans who are receiving or are eligible to receive a prosthetic appliance…are able to receive such an appliance that the Secretary determines is needed from a non-Department of Veterans Affairs provider under a contract with the Department during a public health emergency.” This is especially timely for our industry as the VA recently announced it would discontinue offering nonurgent community care referrals to veterans during the coronavirus pandemic.
AOPA stands ready to assist members with taking advantage of the applicable provisions of this $2.2 trillion-dollar bill as they are implemented. We’ll be holding a webinar next Thursday, April 2 at 2pm ET that will go into more detail on the legislation, the SBA loans, and the process for applying. Register here. We will also update the COVID-19 Response and Resources webpage as information is made available by the SBA, the Department of Treasury, and other entities. In the meantime, if you have any questions about the legislation, please contact Justin Beland, Director of Government Affairs, at jbeland@AOPAnet.org.