On Friday, June 5th, the President signed into law H.R. 7010 which amends several provisions of the CARES Act and the Paycheck Protection Program. In particular, the following changes are effective immediately:
Loan Forgiveness
The “covered period” for forgiveness is extended to 24 weeks or December 31, 2020, whichever is earlier. This additional time is critical for those businesses which are just now beginning to re-open.
The percentage of loan proceeds that must be used for payroll costs was changed from 75% to 60%. Keep in mind, the legislation adds a new wrinkle requiring you to meet this 60% threshold to obtain any forgiveness, as opposed to previously where it was proportional. In other words, you now need to make sure you hit 60%; otherwise there is no forgiveness.
The period to restore the number of employees and amount of payroll to qualify for full forgiveness has been extended to December 31, 2020.
The reduction penalty no longer applies if the borrower, in good faith, is able to document that:
The borrower was unable to rehire a terminated employee and unable to hire a similarly qualified employee to replace the terminated employee; and
The borrower was unable to return to the same level of business activity as before February 15, 2020, due to compliance with guidance issued by Secretary of Health and Human Services, the Director of Center for Disease Control and Prevention or the Occupational Safety and Health Administration, during the period from March 1, 2020 until December 31, 2020, related to the maintenance of standards for sanitation, social distancing or any other worker or customer safety requirements related to COVID-19
Loan Details
The time to pay back any unforgiven portion of a PPP loan is increased to 5 years. This is automatic for loans submitted after June 5; pre-existing loans can also be extended to 5 years, but require agreement by the lender.
Payment of principal, interest and fees is deferred until “the date on which the amount of forgiveness determined…is remitted to the lender.”
Borrowers can now apply for loan forgiveness up to ten months from the day their covered period ends (whichever period is elected); if they fail to do so, no forgiveness will be allowed.
Payroll Taxes
Borrowers may defer 50% of the employer share of their 2020 Social Security taxes until end of 2021 and the other half until end of 2022, even if the borrower’s PPP loan is forgiven prior to December 31, 2020 (originally, deferral was not permitted for a borrower with a forgiven PPP loan).
*Attorney Advertising: The foregoing is a summary of the laws discussed above for the purpose of providing a general overview of these laws. These materials are not meant, nor should they be construed, to provide information that is specific to any law(s). The above is not legal advice and you should consult with counsel concerning the applicability of any law to your particular situation.
Strategizing on how to bring some furloughed employees back? Check out this great video from colleague, Chelsea Whalley of J Donovan Financial.
1. Create a staffing plan that revolves around the needs of the COMPANY first. Ask yourself where you anticipate being busy and where you may be slower. Create a plan accordingly.
2. Choose which staff return based on unique skill sets needed, overall job performance, seniority/tenure, or their willingness to do jobs outside of their normal scope.
3. DO NOT discriminate based on age, perceived disabilities, or by retaliating for taking paid sick leave.
Make sure to DOCUMENT your process ahead of time and COMMUNICATE to your staff your plan to avoid unnecessary stress for everyone.
*REMEMBER TO ALWAYS CONSULT YOUR ATTORNEY OR HUMAN RESOURCES VENDOR FOR ADVICE* If you need these types of vendors, we can refer you to them.
Here’s a follow up on yesterday’s post, did you get the PPP loan and now you are concerned about the process and what documents you need to prepare in order to have the loan forgiven? Check out this great video from colleague, Chelsea Whalley of J Donovan Financial.
The CARES Act requires employers to apply for loan forgiveness with the same lender they applied for the PPP loan at the end of the eight-week period following the disbursement of their loan.
When applying for loan forgiveness, employers will need to provide the following information:
The total requested amount to be forgiven
Documentation verifying the number and pay rate of FTEs on payroll:
Payroll tax filings with the IRS
State income, payroll and unemployment insurance filings
Documentation verifying covered mortgage interest, rent or lease obligations, and utilities
Certification from an authorized representative for the employer that all supplied documentation is true to the fullest extent possible
Certification from an authorized representative for the employer that the amount requested to be forgiven complies with PPP guidelines
After submitting an application, lenders must make a decision on whether an employer’s PPP loan will be forgiven, or how much of the loan will be forgiven, within 60 days. In some cases, a lender may ask for additional information. Employers should monitor their application and pay attention to any requests for additional information. For questions on your company’s loan forgiveness eligibility or application, contact your lender.
Did you get the PPP loan and now you are concerned about making sure the loan is fully forgiven? Check out this great video from colleague, Chelsea Whalley of J Donovan Financial.
U.S. small businesses that were able to secure financial relief through the SBA’s Payroll Protection Program should consider the following to help their cause for qualification of forgiveness of the full principal amount of the loan and any accrued interest:
• Use the loan funds only toward: payroll, including salary, wages, tips and covered benefits for employees; rent or mortgage interest; and utilities.
• Ensure at least 75% of loan funds are allocated for payroll costs.
• Maintain the level of full-time employee (FTE) headcount without reduction during the eight-week covered period.
• Maintain the salaries and wages of your workforce during the eight-week covered period. Any reduction of more than 25% for any employee who makes less than $100,000 will reduce the amount forgiven.
• Preserve proper documentation to support the amount of proceeds used for payroll costs, rent or mortgage, and utilities.
• Prior to June 30, 2020, restore all full-time employment and salary levels back from any reductions made between Feb. 15, 2020, and April 26, 2020. As mentioned above, preserving proper documentation is important, as this information will be used by your lender when evaluating whether an employer qualifies for PPP loan forgiveness.
We know New Yorkers are resilient and are ready to push up their sleeves and help their community during times of struggle, however we are in uncharged waters. If you are looking for ways to help out during this time, the Capalino+Company team has published an excellent list to show creative ways you can help during this time! Stay Safe!
Here are ways for New Yorkers can help during this crisis:
Share the mission of Invisible Hands to provide safe, free food deliveries for NYC’s most at-risk communities facing COVID-19
Sign up for alerts from New York Cares to learn more about what city agencies and community partners are doing to help those most impacted by COVID-19
Donate to the WHYHunger Rapid Response Fund to protect food access for all people by bolstering WHY’s work with emergency food providers, small-scale farmers, and food chain workers
Secure masks, gloves, and hand sanitizer for police officers on patrol across the city through the New York City Police Foundation
Broaden your reach by contributing to The New York Community Trust NYC COVID-19 Response & Impact Fund to aid nonprofit service providers struggling with the health and economic effects of the coronavirus; the fund will give grants and loans to NYC-based nonprofits that are trying to meet the new and urgent needs that are hitting the city
Help the Robin Hood Foundation raise funds to put together a food program for their network of nonprofits to continue to serve low-income communities
Click Here to see the original article in Employee Benefit Advisor
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed by President Trump on March 27 after passing both the House and Senate earlier in the week. This $2.2 trillion stimulus package is wide-reaching and intended to provide economic relief for the individuals and businesses hit hardest by the coronavirus pandemic and the resulting financial downturn.
Within the 800-page bill, there are several important provisions affecting employers, including requirements for coverage of COVID-19 testing and treatments. There are also provisions that extend beyond the coronavirus into other areas of employer benefit designs with potential impact to group health plans beyond the current public health emergency.
1. Coverage of COVID-19 Testing and Treatment
Group health plans must cover COVID-19 screening and the related office visit without cost sharing, which includes COVID-19 tests that may not have been approved by the US Food and Drug Administration. Group health plans must cover, without cost-sharing, “qualifying coronavirus preventive services,” which are items, services and immunizations intended to prevent or mitigate COVID-19 that receive a rating of “A” or “B” from the US Preventive Services Task Force (USPSTF) or a recommendation from the CDC Advisory Committee on Immunization Practices (ACIP) with respect to the individual involved. This requirement will apply 15 business days after the recommendation is made by the USPSTF or ACIP.
2. Payment for COVID-19 Testing and Treatment
Group health plans providing COVID-19 testing must reimburse the provider in the amount of the negotiated rate, if in effect before the public health emergency began, or if not, an amount that equals the cash price as listed by the provider on a public internet website, or a negotiated rate with the provider for less than the cash price. This provision is effective upon enactment of the CARES Act (March 27, 2020) and is not retroactive.
3. Telehealth
The Act allows a high-deductible health plan with a health savings account (HSA) to cover telehealth services prior to a patient reaching the deductible, without regard to whether the services provided via telehealth relate to COVID-19. This provision is effective upon enactment and lasts through plan years beginning in 2021.
4. Over-the-counter Medical Products without a Prescription
The Act allows for account-based plans, including HSAs, flexible spending accounts and health reimbursement arrangements, to reimburse members for the purchase of over-the-counter medical products without a prescription from a physician, regardless whether the product is related to treatment of COVID-19. This reverses a restriction imposed by the Affordable Care Act. These changes are effective for amounts paid/expenses incurred after 2019 and seem to apply indefinitely.
5. Expansion of DOL Authority to Postpone Certain Deadlines
The Act amends ERISA to provide DOL the ability to postpone certain ERISA filing deadlines and provide other relief for a period of up to one year in the case of a public health emergency.
A few things were also noticeably left out of the CARES Act, including two issues many employer groups have been monitoring closely. First, besides the HSA over-the-counter provision described above, there is nothing in this legislation to address prescription drug pricing. No portions of HR 3 or any other existing drug pricing legislation were included in the CARES Act. Second, there is nothing in the package to address the larger issue of surprise billing. Like the drug pricing issue, no language from existing legislation addressing surprise billing was included in the CARES Act.
The good news is that the Act seems to have bought more time on these issues since the healthcare “extender” deadline set to expire May 22 has been changed to November via this bill. The bad news is that means drug pricing and/or surprise billing legislation will need to be addressed in a lame duck session of Congress where it’s difficult, though not impossible, to pass major bipartisan legislation.
Employer groups will continue monitoring these issues as we work through coronavirus-related legislation implementation, and seek opportunities to be included in discussions, on both COVID-19 and other health policy issues, to ensure employer perspectives continue to be heard.
Curious how the CARES Act will impact Employer Health Plans? Check out this great video from colleague, Chelsea Whalley of J Donovan Financial.
On March 27, 2020, President Trump signed the Coronavirus Aid, Relief and Economic Security Act (CARES Act) into law to provide $2.2 trillion in federal funding to address the COVID-19 crisis. The CARES Act makes a variety of changes affecting health plans. These changes include:
1. Expanding the types of coronavirus testing that all health plans and health insurance issuers must cover without cost-sharing (such as deductibles, copayments or coinsurance) or prior authorization
2. Accelerating the process that will require health plans and issuers to cover preventive services and vaccines related to COVID-19
3. Allowing telehealth and other remote care services to be covered under a high deductible health plan (HDHP) before the deductible is met, without affecting the HDHP’s compatibility with health savings accounts (HSAs) (applicable for HDHP plan years beginning on or before Dec. 31, 2021)
4. Treating over-the-counter (OTC) medications, along with menstrual care products, as qualified medical expenses that may be paid for using HSAs or other tax-advantaged arrangements, such as health flexible spending accounts (FSAs) or health reimbursement arrangements (HRAs)
Looking for an easy digestible explanation for how the Paycheck Protection Program (PPP) works? Check out this great video from colleague, Chelsea Whalley of J Donovan Financial.
PAYCHECK PROTECTION PROGRAM
Total Loan Value: Lesser of 10 million or 2.5x the average monthly total payroll incurred in the one year period prior to the loan start date.
Forgivable Portion: 8 weeks from the loan start date used for payroll, interest on mortgage, rent and utilities. At least 75% to payroll.
Main Point: The FORGIVABLE portion of the loan is tied DIRECTLY to Employees being paid- if you decrease wages or terminate, the forgivability is threatened.
*This loan is designed specifically to connect employees back to their employers.
Looking for an easy digestible explanation of the exemptions for companies under Paid Sick Leave? Check out this great video from colleague, Chelsea Whalley of J Donovan Financial.
DOL Clarifies Exemptions to Coronavirus Paid Sick Leave Laws
– Less than 50 employees
– Leave is requested because the child’s school or place of care is closed due to COVID-19 related reasons
– An authorized officer of business has determined that at least one of the 3 conditions described below have been met:
1) The provision would result in small business’s expenses and financial obligations to exceed available business revenue and cause business to cease operating at minimal capacity
2) The employee requesting leave has a specific set of skills and knowledge that without it, the business’s financial and operational health is severely threatened
3) There are not sufficient workers who are able, willing and qualified to perform duties of person requesting leave and this would not allow business to operate at minimal capacity.
DOL is encouraging employers and employees to work together to find a solution during this time that allows the business to be maintained as well as the safety of employees.
New Jersey’s Economic Development Authority recently approved a $40M program which will provide grants and loans or guarantee private bank loans to small businesses affected by the coronavirus pandemic. The EDA package includes a half dozen programs for New-Jersey based businesses including the following:
The smallest businesses, those 10 or fewer full-time equivalent employees, can receive grants between $1,000 and $5,000. The grants specifically target companies in retail, personal-care, entertainment, recreation, accommodation, food service, laundry and repair services. In order to receive money, businesses will have to attest that they need this money to tide them over and won’t cut any employees or will make every effort to rehire laid off or furloughed staff.
The EDA also has set aside $10 million to make loans up to $100,000 each to mid-sized businesses with less than $5 million in annual revenues to help them meet payroll. The 10-year loans would have zero interest for the first five years and the interest rate would be capped at 3 percent for the second half of the loan.
Two more programs, $15 million in total, will be run through community development financial institutions to make available low-interest loans to small businesses that may not be able to tap into traditional bank borrowing. The NJ Entrepreneur Support Program targets start-ups with less than $5 million in revenue and fewer than 25 employees by providing 80 percent loan guarantees to entrepreneurs.
*Attorney Advertising: The foregoing is a summary of the laws discussed above for the purpose of providing a general overview of these laws. These materials are not meant, nor should they be construed, to provide information that is specific to any law(s). The above is not legal advice and you should consult with counsel concerning the applicability of any law to your particular situation.
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