As the COVID-19 pandemic continues to reshape the health care world, it is having a particularly strong impact on home-based care providers, with 92% of home health agencies (HHAs) revealing in a recent survey that they had lost revenue for a variety of coronavirus-driven causes.
Now, three new pieces of legislation, enacted because of the pandemic, should help agencies manage through this difficult time, says Malka Trump, director of compliance at payroll technology company Viventium.
The ability of HHAs to respond to the COVID-19 challenge during the second half of 2020 will be partially contingent upon their understanding of these massive pieces of COVID-related legislation:
— Families First Coronavirus Response Act (FFCRA)
— Coronavirus Aid, Relief, and Economic Security Act (The CARES Act)
— Paycheck Protection Program Flexibility Act (PPPFA)
What the 3 New Laws Address
Each new piece of legislation seeks to address the range of changes to the home-based care business in the wake of COVID-19, Trump says, with different benefits and functions in each law.
The FFCRA specifically addresses pandemic-related concerns, which include the funding of state unemployment insurance, free coronavirus testing and food security initiatives. The act also provides for employer paid sick and childcare leave to employees who cannot work because they either need to care for themselves or another for health concerns related to COVID-19, or they need to care for a child whose school or daycare has closed.
Under the law, employers can claim those leave payments as credits that offset their payroll tax deposits.
The CARES Act provides a range of benefits for employers, including the 50% employee retention credit, the deferral of payment of employer social security and the Paycheck Protection Program (PPP), which is administered by the Small Business Administration (SBA).
The PPPFA expanded the PPP to increase the likelihood of small businesses receiving forgiveness of their loans.
“Probably the most important thing to know is whether your current payroll provider can accommodate these laws and simplify the process so that you can focus on taking care of patients and employees,” Trump says.
What HHAs Need to Know, More Specifically
Not surprisingly, there are key nuances to each law. Provisions in the CARES Act that employers can take advantage of include:
— The deferment of the payment of the employer portion of social security tax, which means health agencies can delay paying this tax until either December 31, 2021 (50% due) and December 31, 2022 (50% due), freeing up much-needed cash right now.
— The 50% employee retention credit for businesses whose operations have been affected by the COVID-19 pandemic. Employers who continue to pay their employees may be eligible for a tax credit equal to 50% of employees’ qualifying wages (up to $10,000 in wages per employee).
— The Paycheck Protection Program (PPP). Employers with 500 or less employees may be eligible for a PPP loan. If funds received are used to cover eight weeks of payroll costs (expanded to 24 weeks under PPPFA) and certain other business expenses, the loan can potentially be forgiven.
Additionally, though HHAs are legally exempt from FFCRA leave requirements, if they are voluntarily providing paid leave to employees, they can elect coverage and may then be entitled to the tax credits.
“It’s extremely important that a health care agency and their payroll provider are in sync when it comes to taking advantage of COVID-19 legislation,” Trump says.
4 Key Questions HHAs Must Ask
Because many COVID-19 benefits must be processed through payroll or require payroll data, Trump notes that agency leaders must know the answers to the following questions:
- Can I process payroll tax credits available under the FFCRA and CARES Act through my payroll and reduce my federal tax deposit?
- Does my payroll provider provide tracking tools so I can manage my tax credits and ensure I don’t miss any?
- Does my provider support the deferral of employer social security tax so I can retain those funds and use them for more immediate purposes?
- Does my provider have the reporting tools to provide me with the required payroll data to apply for an SBA PPP loan, and then, later, to apply for loan forgiveness?
Payroll compliance is a team effort — as is understanding how to benefit from the new COVID-driven legislation. To learn more about how Viventium can help, visit Viventium.com.