The views, information, and guidance in this resource are provided by the author and do not necessarily reflect those of WellSky. The content provided herein is intended for informational purposes only. The information may be incomplete, and WellSky undertakes no duty to update the information. It is shared with the understanding that WellSky is not rendering medical, legal, financial, accounting, or other professional advice. WellSky disclaims any and all liability to all third parties arising out of or related to this content. WellSky does not make any guarantees or warranties concerning the information contained in this resource. If expert assistance is required, please seek the services of an experienced, competent practitioner in the relevant field. WellSky resources are not substitutes for the official information sources on COVID-19. Providers should continue to track developments on official CMS and CDC pages, including:
- CMS response to Coronavirus and latest program guidance: https://www.cms.gov/About-CMS/Agency-Information/Emergency/EPRO/Current-Emergencies/Current-Emergencies-page
- CDC interim infection prevention and control recommendations: https://www.cdc.gov/coronavirus/2019-ncov/infection-control/control-recommendations.html
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law by the president on March 27, 2020. It is the largest stimulus package in the history of the United States, and it will have profound effects on all of us. Although some of the details are not yet clear, we do know that the CARES Act provides tangible relief to a variety of groups — including individuals, large corporations, small businesses, hospitals, public health programs, federal safety net programs, state and local governments, and education organizations.
In this blog, we’re focusing on the issues important to WellSky clients by summarizing the provisions that apply to individuals and small businesses, along with selected public health provisions — specifically telehealth, telemedicine, and healthcare supplies (such as personal protective equipment, or PPE).
Individual benefits under the CARES Act include the following:
— Payments of up to $1,200 per individual, with additional amounts of up to $500 per child. The payments would begin to phase out at $75,000 annual income for single filers and $150,000 for joint filers. Payments would decrease as incomes increase and phase out completely at $99,000/$198,000 for individual/joint filers. Payments are based on either 2018 or 2019 tax filings. The payment mechanisms are not yet clear, but it appears that the government intends for payments to be made automatically.
— A waiver of the early withdrawal penalty for withdrawals from a qualified retirement plan up to $100,000 for coronavirus-related reasons. Income from these distributions could be taxed for three years, and taxpayers could recontribute these funds within the three-year period without regard to the annual contribution cap.
— A significant expansion of unemployment benefits to those not traditionally entitled — including people who are self-employed, independent contractors, and people with limited work history. Additionally, the federal government will provide an additional $600 per week, on top of state benefits for a period of four months. It would also provide an additional 13 weeks of unemployment benefits through December 31, 2020 to assist people who remain unemployed after state benefits lapse.
— The CARES Act also provides taxpayers greater flexibility in making and deducting charitable contributions.
The CARES Act includes significant Medicare policy changes:
— Elimination of the three-year established patient requirement for the telehealth provisions contained in earlier COVID-19 legislation.
— Temporary elimination of the 2 percent Medicare sequester reduction (which has been in effect since 2013) from May 1, 2020 to December 31, 2020.
— An extension of the 50/50 blended rate for home/durable medical equipment (HME/DME) in rural and non-contiguous, non-competitively bid areas through the duration of the COVID-19 emergency. This comes along with the establishment of a new 75/25 blended rate for all other non-competitively bid areas.
— An expansion of those provider types who can prescribe home health services to include physician assistants, nurse practitioners, and clinical nurse specialists. Unlike most of the programs in the CARES Act, this change is permanent.
How the CARES Act affects programs for small businesses:
— Paycheck Protection Program: This program would provide forgivable loans to small businesses for funds intended to cover payroll, rent/mortgage payments, and utilities for a period of eight weeks:
— The covered loan period is defined as February 15, 2020 to June 30, 2020.
— Allowable expenses include rent or mortgage payments, employee salaries, paid sick or medical leave, insurance premiums, and utility payments.
— The loan forgiveness would be equal to qualified expenses incurred during an eight-week period after the origination date of the loan.
— Eligible payroll costs will be the amount incurred for the eight-week period compared to the previous year. Forgiveness will be calculated on a proportionate basis of applicable costs and/or employee counts from year to year.
— Loan forgiveness will not count as income when forgiven.
— No collateral or personal guarantees.
— Portions of loans not forgiven are payable over a maximum of 10 years at a 4-percent interest rate.
— The maximum loan amount will be the lesser of $10 million or 2.5 times the employer’s previous 12 monthly average of the allowed expenses listed above.
— We still do not have any information on the exact program requirements, or how to apply. But we understand that such guidance should be available soon.
There are additional Small Business Administration (SBA) 7(a) loan program extensions that are briefly introduced below:
— The SBA Express Loan provides an accelerated turnaround time for SBA review of loans up to $1 million. This aims to deliver an expedited way to obtain an SBA loan that is government-guaranteed.
— Emergency Economic Injury Disaster Loans (EIDL): The CARES Act expands access to EIDL loans and also allows for emergency grants up to $10,000 along with relaxed underwriting requirements.
— The CARES Act also provided new programs or amended existing programs for the Minority Business Development Agency and Women’s Business Center Program loans.
— The CARES Act requires the SBA to pay the principal, interest, and certain fees that are owed on covered loans for a six-month period beginning on the next payment due date. These loans include existing 7(a) loans along with 504 and microloan products. We are awaiting additional information on this program.