What DOs need to know about the new COVID-19 relief program
Thanks in large part to advocacy by the American Optometric Association (AOA) on behalf of optometry and our patients, Doctors of Optometry have secured $ 1.69 billion in aid from past relief programs, 2 and through ongoing advocacy efforts, this recent legislation contains more good news. An additional $ 900 billion in COVID-19 stimulus funding has been approved, and here are the highlights every OD needs to know.
Related: What the COVID-19 relief package means for ODs
Second draw PPP rules
Congress authorized $ 325 billion in additional funding for the Small Business Administration (SBA) to administer paycheck protection program (PPP) second-draw “loans” through lending institutions. private, as was done in the first round of the PPP.
To be eligible, firms applying for a PPP Second Draw loan must:
- • Have 300 employees or less
- • have used (or will use) the total amount of their first PPP loan
- • Show a reduction (i.e. loss) of at least 25% in gross revenue for the first, second or third quarter of 2020, compared to the same quarter in 2019
Only one second-draw PPP loan can be obtained per qualifying entity, and for most optometry practices, loan amounts will be up to 2.5 times the firm’s average monthly salary costs in the previous year. the loan (or calendar year). Borrowers are again eligible for full PPP loan forgiveness if at least 60 percent of funds are used for salary costs, with up to 40 percent used for eligible non-salary costs.
Eligible non-salary costs have been expanded to include:
• Mortgage, rent and utility payments covered (as in the first-draw PPP)
• Covered operating expenses (eg, human resources and accounting costs, software costs, cloud computing costs, and group health / dental insurance costs)
• Costs of covered material damage (i.e. due to public disturbances in 2020 which are not covered by insurance)
• Covered supplier costs (that is, amounts owed to a supplier for a contract, purchase order, or order for goods such as frames and lenses that was in effect before the loan was taken out and which are essential to the operations of the firm at the time the expenses were incurred)
• Worker protection costs covered (for example, personal protective equipment [PPE] and security modifications of the installation) incurred during the period covered by the loan
Credit institutions approved to offer the initial PPP loans may offer second-draw PPP loans on the same terms as the initial loans.1
On November 18, 2020, the US Department of the Treasury and the Internal Revenue Service (IRS) underscored and reiterated their previous position that any normally deductible business expense (s) used for Justifying the cancellation of a PPP loan would not also be tax deductible, in order to avoid a “double taxation advantage.” 3 Indeed, this ignored the original intention of Congress and essentially made the PPP loan amount taxable income for the practice, increasing the tax burden of natural persons passed on to the owner (s).
Congress has now resolved this challenge, declaring that the taxable income of the practice will not include any amount that would otherwise result from the cancellation of a PPP loan or an economic disaster loan (EIDL) under the CARES law (Coronavirus Aid, Relief, and Economic Security). grant or other certain loans from the CARES Act.
It further specifies that:
• Tax deductions are allowed for otherwise deductible expenses paid with the proceeds of a canceled PPP loan.
• Tax deductions are allowed for otherwise deductible expenses paid with amounts not included in income for the EIDL program.
• The tax base and other attributes of the borrower’s assets will not be reduced as these amounts are excluded from gross firm income in the above two cases.
For PPPs, this takes effect from the date of enactment of the CARES law. For second-draw PPP loans, it is effective for tax years ending after the enactment date of the second-draw PPP provision. For EIDL, the provision applies to taxation years ending after the date of enactment of the CARES Act.1
New funding was provided for the EIDL program, the previously created, administered and delivered low interest loan program directly through the SBA. Although the terms are favorable for small businesses using an EIDL, it is not a grant and must be repaid.
The period covered for emergency EIDL grants has also been extended until December 31, 2021. In addition, the part of the CARES law that requires PPP borrowers to deduct the amount of their EIDL advance from the amount of their PPP remittance has been repealed.
Health insurance reimbursement
The legislation provides for a one-year, one-year increase in the Medicare physician fee schedule of 3.75% in 2021 and delays impending 2% reductions in Medicare escrow payments by 3 months, until March 31, 2021.1
HHS Supplier Assistance Fund Grants
An additional $ 3 billion in grants has been allocated to the Health and Social Service Provider (HHS) Relief Fund through which hospitals and health care providers can be reimbursed for care-related expenses loss or loss of income directly attributable to the COVID-19 public health emergency.
In addition, the HHS must now allocate at least 85% of the funds currently uncommitted to the Provider Relief Fund through an application-based portal to reimburse healthcare providers for the financial losses they suffered in 2020.1
Congress also called on HHS to focus more on Medicaid providers and others who may have been under-represented in previous rounds of Provider Relief Fund distributions, as well as providers at risk of going out of business. .
Stimulus checks for households
Some ODs and most of their staff will receive another round of stimulus checks in the amount of $ 600 for each adult and $ 600 for each dependent in the household aged 16 or under. Technically, these are refundable tax credits for which installments are issued.
Based on 2019 income, check amounts start to disappear at a rate of $ 5 per $ 100 of additional income based on adjusted adjusted gross income of:
- • $ 75,000 for individuals
- • $ 112.5K for heads of household
- • $ 150,000 for married couples applying jointly
Anyone with a modified adjusted gross income in 2019 of $ 87,000 or more will not receive a stimulus check (or for married couples jointly depositing this threshold is $ 174,000 or more) .4
DOs and their staff who are made redundant are eligible to receive extension benefits from most provisions of the CARES Act on unemployment (in particular, Pandemic Unemployment Assistance, Federal Unemployment Benefit, and emergency unemployment benefit in the event of a pandemic). These programs were due to expire at the end of 2020 but have been extended at least until March 14, 2021. They include an additional federal unemployment insurance benefit of $ 300 per week in addition to state unemployment insurance benefits.
COVID tests, tracing and vaccines
With the majority of DOs and their staff eligible to receive vaccine administration in either Phase 1a or Phase 1b of the Centers for Disease Control and Prevention (CDC) Priority Table, and many DOs eligible to order COVID testing and administer COVID vaccinations and be reimbursed appropriately for these services, Congress has allocated additional funds totaling more than $ 31 billion to state and local governments and the CDC for use in COVID testing and contact tracing, as well as the distribution and monitoring of vaccines.
Other tax implications
Refundable salary tax credits for sick leave and paid family leave, enacted in the Families First Coronavirus Response Act, have been extended until the end of March 2021.
Again, thanks to the efforts of the AOA, 2 more welcome pieces of good news have been included in the bill.
First, Congress berated the Federal Trade Commission (FTC) and legislated to delay the implementation of flawed and unnecessarily burdensome changes to the FTC’s contact lens rule, which require contact lens prescribers to obtain the signature of each patient wearing contact lenses on a form certifying that they have received contact lenses. a copy of their contact lens prescription, then keep this signed form for 3 years, and be able to produce it at the request of the investigators under penalty of sanction. The deadline is until April 1, 2021.
Additionally, the American Optometric Association (AOA) has successfully lobbied Congress to demand that the HHS fully enforce supplier nondiscrimination in its rule making (also known as the Harkin Act).
Extension of PPP eligibility
Eligibility for PPP loans has been broadened to include 501 (c) 6 organizations that do not devote more than 15% of their activity to lobbying efforts, that have not spent more than $ 1 million in total lobbying in the most recent fiscal year that ended before February 15, 2020 and has 300 or fewer employees.
This could be of huge benefit to optometric organizations such as the AOA, state optometric associations, and other eligible groups within the profession.
Once again, a big thank you to the AOA, its leaders and volunteers, as well as the countless doctors of optometry across the country who lobbied their Senators and Representatives to help make this round of relief. criticizes a reality.
We are closer to the end of this pandemic than we are to the start, so in the meantime, be sure to take advantage of these programs as you see fit, keep holding on, and stay safe and healthy.
1. Democratic staff of the House Appropriations Committee. HR 133 – DIVISION BY DIVISION SUMMARY OF COVID-19 EMERGENCY PROVISIONS. Wall Street J. Available at: https://s.wsj.net/public/resources/documents/SummaryofCoronavirusReliefProvisions122020.pdf. Accessed 12/22/20.
2. American Association of Optometry. AOA President: Success in a very eventful year. Available at: https://www.aoa.org/news/inside-optometry/aoa-news/house-of-delgates-successes-amid-very-turbulent-year?sso=y. Accessed 12/22/20.
3. American Association of Optometry. The IRS decision on PPP loans could increase taxes on the practices, with the AOA pushing for a solution in the new COVID-19 bill. https://www.aoa.org/news/practice-management/perfect-your-practice/ppp-loan-tax-implications?sso=y. Accessed 12/22/20.
4. Chin J. Here’s who doesn’t get the $ 600 stimulus check if the COVID-19 relief bill is signed. United States today. Available at: https://www.usatoday.com/story/money/2020/12/23/stimulus-checks-who-doesnt-get-stimulus-check-covid-19-relief-package/4013736001/. Accessed 12/23/20.