Final Analysis: COVID-19 Government Stimulus Packages
on October 20, 2021
Healthcare providers were presented with several economic stimulus programs to relieve some of the burdens brought on by the COVID-19 public health emergency (PHE). During a recent presentation, VGM’s Mark Higley, VP of Regulatory Affairs, and Craig Douglas, VP of Payer & Member Relations, have summarized these programs, what is required of providers to stay compliant, and the tax implications surrounding these programs.
HHS Provider Relief Fund (PRF) and Updated Reporting Requirements
Providers did not need to apply for this program to receive funds. Providers who received over $10,000 in funds must adhere to the reporting periods based on payment timeframes:
- Period 1:
- Funds received April 10-June 30, 2020
- Funds must be used up by June 30, 2021
- Reporting portal opened July 1, 2021
- Complete report by September 30, 2021
- Period 2:
- Received funds July 1-December 31, 2020
- Funds must be used up by December 31, 2021
- Reporting portal will open January 1, 2022
- Complete report by March 31, 2022
- Period 3:
- Funds received January 1-June 30, 2021
- Funds must be used up by June 30, 2022
- Reporting portal will open July 1, 2022
- Complete report by September 30, 2022
- Period 4:
- Funds received July 1-December 31, 2021
- Funds must be used up by December 31, 2022
- Reporting portal will open January 1, 2023
- Complete report by March 31, 2023
Remember that PRF funds must be used to prevent, prepare for, and respond to coronavirus, and all expenses need to be supported by adequate documentation. Tax-wise, the payments received from the PRF are included in gross income for for-profit providers. Provider relief funds monies received are taxable unless the entity is not for profit.
Medicare Advanced Payments
The COVID-19 Accelerated or Advance Payment (CAAP) program was created as a result of the PHE, and providers had to apply to receive these funds.
- Repayment begins one year from the payment issue date and continuing for 11 months, Medicare payments owed to providers will be recouped at 25%.
- After the 11 months end, Medicare payments owed to providers will be recouped at a rate of 50% for six months.
- After the six months end, a letter for any remaining balance of the payment(s) will be issued. If a provider doesn't satisfy that within 30 days, 4% interest begins to accrue
Economic Injury Disaster Loans (EIDL) Advance Payments
Due to the PHE, the Small Business Association (SBA) added an advanced payment feature to loans, which did not have to be repaid. EIDL applicants can qualify for up to $15,000 without repayment, but eligibility criteria must be met. The Targeted EIDL Advance provides funding of up to $10,000 to eligible applicants, and the Supplemental Targeted Advance provides an additional payment of $5,000 to eligible applicants.
Payroll Protection Program (PPP) Taxation
The CARES Act excludes the forgiveness of PPP loans from federal gross income and federal income tax. For providers who received payroll protection loans, those payments are exempt from federal income tax.
State tax implications and expenses incurred:
- Forgiven loan amounts may be subject to state income taxation.
- In the several states that have “rolling conformity” to the IRC, these forgiven loans will likely not be subject to tax.
- Providers should know the status of their states’ conformity rules to plan accordingly.
- Congress approved the deductibility of covered expenses paid with PPP funds. So, when used for the appropriate expenses, those funds are deductible.
- Some states may deny the deduction or require income inclusion and allow the deduction. Visit https://taxfoundation.org/state-tax-forgiven-ppp-loans/ to find the latest information on their state rules.
- Taxpayers may consider filing extensions.
- Small business owners should talk with a tax adviser familiar with their state's tax laws before filing.
New OSHA Requirements
OSHA’s COVID-19 Emergency Temporary Standard (ETS) has appeared on the Federal Register website as an Interim Final Rule with request for comments. This ETS directs OSHA to reduce the risk for workers who are at risk of contracting COVID-19 in workplaces including healthcare facilities, DME suppliers, and home health agencies.
What Providers Need to Keep in Mind:
- Implementation of these regulations and additional restrictions could vary by state.
- Providers must comply with these requirements.
For any questions, please contact Craig Douglas at [email protected] or 319-290-3535 and Mark Higley at [email protected] or 319-504-9515.
- paycheck protection program