Updated May 16, 2020 9:00 am: We have talked about the CARES Act before with regard to the loan programs and the other measures that impact physicians and their practices. This week, there are rumblings of another stimulus package to prop up the country and its economy in these trying times: the HEROES Act.
It stands for “Health and Economic Recovery Omnibus Emergency Solutions” (HEROES). It is massive: $3 Trillion, as proposed, bigger than the $2.2 Trillion CARES Act. It has been introduced in the Democrat-led House and still needs to pass both House and Senate. Without getting into politics, the general consensus is that the chance of it passing as-is is nearly nil. However, it helps to know what’s in it at this time- so we can follow along. Some of it will be very useful for physician and their practices. So, let’s get started.
Changes to PPP Loan Forgiveness Program
The wildly successful PPP Loan program has seen its share of roll-out debacles and confusion. At this time, most small businesses who applied for the loan should have received it. It still has about $120 Billion left in funds. So, if you have not yet received it but want to, you still have until June 30, 2020 to apply for one.
Now that everyone’s focus has moved from loan procurement to maximizing forgiveness, we have our eye on any changes to the rules for loan forgiveness. And the HEROES Act has some in store. They should all prove very useful, so I’m hoping this part remains in any version that is finally approved.
- Covered period for forgiveness extended from June 30 to December 31, 2020 (from 8 weeks to 24 weeks)
- Loans to be repayable over 5 years, as opposed to 2 years
- Eliminates the 75/25 rule for forgiveness
- Creates a safe harbor for employers who are unable to rehire within the stipulated time frame
- Allows businesses receiving PPP Loan to take the Employee Retention Tax Credit
- Allows businesses receiving the PPP loan to defer payroll taxes
Changes to Families First Coronavirus Response Act (FFCRA)
FFCRA went into effect on April 1st, 2020. Here are some proposed changes:
- Extends the tax credits under FFCRa through the end of 2021
- Increases wage limit that can be claimed under FFCRa to $511 for employees caregiving for COVID-affected family members
- Allows employers to claim up to $12,000 in payroll tax credits, rather than $10,000.
- Individuals can elect to use their average daily self-employment income from 2019 rather than 2020 to calculate their credit
Other Small Business Assistance
- EIDL grant to be not included in taxable income for a business
- $10 Billion in grants to small businesses which have “suffered financial losses as a result of the coronavirus outbreak”.
- Payroll tax credits up to 50% for employers who employ first responders.
- Employee Retention Tax Credit goes up to 80% of qualified wages, from 50% that CARES Act specified and improves upon its other components.
- For self employed individuals: a 90% refundable tax credit for certain self-employed individuals who report at least 10% loss of income in 2020 compared to 2019. Subject to income phase-out.
Health Provisions of HEROES Act
- Increases Medicaid payment to States by 14%
- No cost-sharing for patients for COVID-19 treatment
- Improvements in Medicare’s Accelerated and Advance Payment
- 2 month open enrollment period for health insurances for the uninsured to get health coverage
Student Loan Relief
- Expands loan relief provisions (suspension of payments, interest, and collections) under CARES Act to all Federal Student Loans, including FFEL loans as well as Perkins loans.
- Extends length of relief by another year: till September 30, 2021
- Private student loan forgiveness of $10,000 (or the remaining loan balance, if less than $10,000) only for economically distressed students: those who have $0 monthly payments based on income-contingent repayment (ICR) plan or an income-based repayment (IBR) plan; or are in default/delinquency/forbearance or deferment due to financial or other reasons.
- Federal student loan forgiveness of $10,000 only for distressed borrowers, as for private loans.
- For PSLF: payments made towards previously-consolidated federal loans may count towards the 120- required payments.
Assistance for Individuals and Families
- Premium pay for Essential workers up to $10,000. For highly compensated employees who earn greater than $200,000 annually, up to $5000.
- Extension of Federal unemployment compensation of $600/week to January 31, 2021
- Loan Repayment Program to enhance recruitment and retention of Public Health Workforce. I’m curious whether this refers to a student loan repayment incentive for those who opt to work for state or local governments.
- Required Minimum Distributions waived for 2019, in addition to being waived for 2020 (as per CARES Act).
- 60 day requirement for rollover of RMDs waived
- $1200 refundable tax credit for each family member, up to 3 dependents and to a maximum of $6000 per family. This will be completely phased out beyond an income of $99000 for individuals and $198,000 for joint filers.
- $500 above-the-line tax deduction for certain professional expenses for first responders and COVID-19 front-line employees.
Assistance For Alien and Immigrant Physicians
- Immigrant physicians, who are stuck in backlogs may immediately apply for Green Cards if they will participate in COVID-19 work
- Expedited visa applications for physicians who will engage in COVID-19 work
- Expand the Conrad-30 Waiver Program to 35 spots per State
- Provide work Authorizations (EAD) to non-immigrant physicians to improve their mobility and flexibility to help out with COVID-19 work
All in all, a sweeping set of changes. It will be very interesting to follow its course through the Legislature and hope that at least some of this can come to fruition.
Thank you very much for reading! I will continue to update this as the news evolves and we gain better understanding.
Updates:
- 5/15/20: House passes the HEROES Act. No sign yet of Senate showing any interest in working on it.