COVID relief bill will let businesses seek second PPP loan

 Some American small businesses will be able to seek a second government-backed loan to help them get through the coronavirus pandemic.

The $900 billion stimulus bill that’s headed to President Trump’s desk includes about $284 billion in additional funding for the Paycheck Protection Program, which offered small employers forgivable loans meant to keep their staff on the payroll.

The Small Business Administration has already distributed 5.2 million PPP loans worth more than $525 billion. Businesses that are still struggling may be able to get another round of help — but they’ll have to meet stricter criteria than in the spring.

For one, only companies with 300 or fewer employees will be eligible for second loans, down from a limit of 500 in the program’s first iteration, according to text of the stimulus legislation Congress passed Monday.

Additional loans will be capped at $2 million instead of the previous limit of $10 million. And applicants seeking a second loan will have to show that their sales in at least one quarter of this year dropped by 25 percent or more from the prior year’s levels.

Additionally, the new law bars publicly traded companies from seeking PPP funds, a provision that was added after outrage about hundreds of such firms snagging millions of dollars in loans. Some big names such as Shake Shack and Lindblad Expeditions have returned the money.

The bill also simplifies the process for forgiving loans of less than $150,000. Those small borrowers will just have to sign a one-page form attesting that the money was used for its intended purpose.

That’s a win for banks, which had expressed concerns that the initial forgiveness process was too burdensome for small companies receiving little loans.

The stimulus package also gives the SBA $50 million to conduct audits and take up other efforts to tackle fraud in the massive program, according to the New York Times. The agency and the Treasury Department have already pledged to audit all loans larger than $2 million, but that will encompass less than 1 percent of the loans and only about 20 percent of all the money that’s been given out.

From New York Post, 12-22-20

Pfizer’s COVID-19 Vaccine First to be Granted Emergency Use Authorization by the Food and Drug Administration

 On December 11, 2020, the FDA authorized the emergency use of the first COVID-19 vaccine, manufactured by Pfizer. Although details are rapidly evolving, we want to share what we know now to help you answer questions from your employer groups.

Initial supplies of the vaccine will be limited. Most states will distribute it in phases, with high-risk populations like healthcare workers and nursing home residents addressed first. As the vaccine becomes more readily available, each state will communicate when and where it is being offered. 

Once it is available to the general public, CareFirst members will pay nothing for any authorized COVID-19 vaccine. 

Initially, the federal government will purchase and distribute all COVID-19 vaccinations. During this period, employer-sponsored plans will only be responsible for the administration costs rather than the entire cost of the vaccines.

Administration costs are based on the Centers for Medicare and Medicaid Services rates and are estimated to be about $17 for the first dose and $28 for the second, for a total cost of approximately $45. As additional vaccines are authorized and become available, different rates may be determined. 

Carefirst-12-14-2020

IRS Issues Instructions for 2020 Reporting Forms 1094-1095

 

 

The Internal Revenue Service (IRS) has issued further instructions for 2020 reporting forms 1094-B, 1094-C, 1095-B, and 1095-C. The instructions are as follows: The due date for providing Form 1095-C to employees has been extended from January 31, 2021, to March 2, 2021. If certain conditions are met, the IRS will not impose a penalty for failure to furnish Form 1095-C to any employee enrolled in an Applicable Large Employer (ALE)(50 or more Full Time Equivalent Employees) member's self-insured health plan who is not a full-time employee for any month of 2020. The IRS will not impose a penalty for failure to file Form 1095-C with the IRS or failure to furnish Form 1095-C to employees if you make a good faith effort to comply with the information reporting requirements. Form 1095-C has been modified with new codes for reporting offers of individual coverage HRAs (ICHRAs) and new lines for reporting required information. The plan start month is required for the 2020 Form 1095-C. The ALE must enter a two-digit number. Group Benefit Services can also help with this requirement for a fee.  If you need assistance, please do not hesitate to contact me at 410-239-5009. Use the links below to access copies of the instructions. 1094-B/1095-B 1094-C/1095-C

 

Administration extends COBRA enrollment period for laid-off workers

People who’ve been laid off or furloughed from their jobs now have significantly more time to decide whether to hang on to their employer-sponsored health insurance, according to a recent federal rule.

Under the federal law known as COBRA, people who lose their job-based coverage because of a layoff or a reduction in their hours generally have 60 days to decide whether to continue their health insurance. But under the new rule, that clock doesn’t start ticking until the end of the COVID-19 “outbreak period,” which started March 1 and continues for 60 days after the COVID-19 national emergency ends. That end date hasn’t been determined yet.

By extending the time frame to sign up for COBRA coverage, people have at least 120 days to decide whether they want to elect COBRA, and possibly longer depending on when they lost their jobs.
Take the example of someone who was laid off in April, and imagine that the national emergency ends Aug. 31. Sixty days after that date takes the person to the end of October. Then the regular 60-day COBRA election period would start after that. So, under this example, someone whose employer coverage ended at the beginning of May could have until the end of December to make a decision about whether to sign up for COBRA, with coverage retroactive to the beginning of May.

Some health policy experts question the usefulness of the change, given how expensive COBRA coverage can be for consumers, and how limited its reach: It isn’t an option for people who are uninsured or self-employed or who work for small companies.

“For ideological reasons, this administration can’t do anything to expand on the Affordable Care Act’s safety net,” said Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms. “So they’re using these other vehicles. But it’s really a fig leaf. It doesn’t do much to actually help people.”

What does this rule change mean for workers? If you have lost your job, here are some things to consider.

Playing a waiting game
Under the new rule, workers can keep their COBRA options open far longer than before. It’s always been the case that people could take a wait-and-see approach to signing up for COBRA during the first 60 days after losing their coverage. If they needed care during that time, they could elect COBRA, pay the back premiums and continue their coverage. But if they didn’t need care during that time, they could save a chunk of money on premiums before opting for other coverage to kick in after the 60-day period.

Now, people have even more time to wait and see. Under the rule, once the administration declares the national emergency over, laid-off workers would get 120 days to decide whether to purchase their job-based insurance — 60 days under the new rule and the regular 60 days allowed as part of the COBRA law.

“It becomes a long-term unpaid insurance policy,” said Jason Levitis, a nonresident fellow at the Center for Health Policy at the Brookings Institution. “There’s no reason to enroll until something bad happens.”

This is not without risk, consumer advocates point out. Someone who has a serious medical emergency — a car accident or a stroke — might not be able to process their COBRA paperwork before they need medical care.

Waiting too long could also affect people’s ability to sign up for other coverage. When people lose job-based coverage, it triggers a special enrollment period that allows them to sign up for new coverage on their state health insurance marketplace for up to 60 days afterward.

“You could miss your opportunity to enroll in the [insurance] exchange” created under the Affordable Care Act, said Katy Johnson, senior counsel for health policy at the American Benefits Council, an employer advocacy group.

Don’t count on the boss to clue you in
Employers are not mandated to tell people promptly about their eligibility for COBRA. The same federal rule that gives workers more time to sign up for COBRA also pushes back the notification requirements for employers.

“Once an employer lays you off, they don’t have to notify you that you’re eligible for COBRA until after the emergency period,” said Karen Pollitz, a senior fellow at KFF, the Kaiser Family Foundation. (KHN is an editorially independent program of the foundation.)

For many employers, especially large ones that outsource their benefits administration, notifications are routine and are continuing despite the federal change, said Alan Silver, a senior director at benefits consultant Willis Towers Watson. However, for smaller companies with fewer than 200 workers, getting the information out might be an issue, Silver said.

Costs can be jaw-dropping
Opting for COBRA is expensive because workers have to pay both their portion of the premium and their employer’s share, plus a 2% administrative fee. A 48-year-old paid $599 a month on average for individual COBRA coverage last year, according to a KFF analysis.

In addition, if people elect COBRA several months after losing their coverage, they could be on the hook for thousands of dollars in back premiums.

The upside for former employees is that sticking with their previous employer’s plan means they don’t have to start from scratch paying down a new deductible on a new plan. Nor do they have to find new doctors, as often happens when people switch health plans and provider networks change.

Ten percent of workers laid off or furloughed because of the coronavirus pandemic reported they had COBRA coverage, according to a survey conducted last spring by the Commonwealth Fund.

The COBRA extension is available only to people who worked at firms with 20 or more employees and had job-sponsored coverage before being laid off or furloughed. If the company goes out of business, there’s no health insurance to continue to buy.

Might hospitals step in to pay premiums?
Employers are typically not big fans of the program. Workers who elect COBRA are typically older and sicker than others with employer coverage, the KFF analysis found. They may have serious medical conditions that make them expensive to cover and raise employer costs.

Some policy experts are concerned that giving people more time to sign up for COBRA leaves the door open for hospitals or other providers to offer to pay sick patients’ back premiums in order to increase their own payment above what they’d receive if someone were on Medicaid or uninsured. Doing so could be a boon for some patients but raise health care costs for employers, said Christopher Condeluci, a health care lawyer who does legal and policy work around the Affordable Care Act and ERISA issues.

“Employers are worried,” said Pollitz. After getting laid off, “what if you’re uninsured and you wind up in the hospital six months in, and then the hospital social worker learns you’re eligible for COBRA and offers to pay your premium?”

KHN (Kaiser Health News) is a nonprofit news service covering health issues. It is an editorially independent program of KFF (Kaiser Family Foundation), which is not affiliated with Kaiser Permanente.

By Michelle Andrews, Kaiser Health News | July 20, 2020 at 10:41 AM

IRS Allow Mid-Year Election Changes-Covid 19

When employees made their annual health plan enrollment decisions last fall, no one was expecting the chaos of the COVID-19 pandemic. Many consumers are rethinking the choices they made (or finally giving the elections the proper amount of attention employers have been urging for years). And in light of the current situation, the IRS is giving employers and employees a one-time do-over.

This week, heeding the requests of employer groups, the IRS announced that it would allow employees to make mid-year changes to their health plan. Those who originally opted not to enroll in a plan can now do so, or those who are enrolled in a plan drop it, provided they have alternative coverage options. Alternatively, an employee can decide to switch from one type of plan to another.

The latter could be particularly meaningful to employees who are dealing with a significant decrease in their income and looking for a cheaper alternative.

In addition to changing their health insurance coverage, employees will also be able to change their FSA contributions. Unused FSA contributions are forfeited at the start of the next plan year, which could be a problem for consumers who had previously budgeted for elective care but are now putting it off until the pandemic has subsided.

The IRS is also allowing employers to increase the carryover limit from $500 to $550–or 20% of the maximum FSA contribution limit–and also offer an extended grace period for employees to use up their 2019 carryover balance.

None of these changes are mandatory, and it’s up to an employer to decide whether they will offer any or all of the increased flexibility options to employees.
The latest updates follow other tweaks to FSAs and HSAs included in the CARES Act, which expanded eligible items for use with these accounts to include over-the-counter drugs.  

Excerpt from Benefits Pro May 2020

Disaster Relief Payments—Tax-Efficient Assistance to Employees Impacted by Covid-19

President Trump’s national emergency declaration on March 13 triggered tax code Section 139, which allows employers to exclude disaster assistance payments from employees income.

Tax code Section 139 enables employers to make non-taxable qualified disaster relief payments to employees for reasonable and necessary expenses resulting from the coronavirus pandemic.

Generally, payments made by an employer to, or for the benefit of, an employee must be included in the employee’s gross income under Section 61 and cannot be treated as a nontaxable gift under Section 102(c). Prior to the enactment of Section 139, various types of disaster payments made to individuals have been excluded from gross income under a general welfare principle, but no specific statutory exclusion was available for disaster payments from employers to employees.

Section 139 was enacted in the aftermath of the September 11 terrorist attacks. When triggered, it overrides the broad income inclusion principles of Section 61 and allows employers to provide direct financial assistance to employees impacted by a qualified disaster without adverse tax consequences.

Defining a Qualified Disaster
Most advisers understandably focus on Section 139’s application to losses incurred as a result of terrorist attacks and natural disasters such as hurricanes, tornadoes, wildfires, and flooding. However, Section 139(c)’s gatekeeping requirements are much broader and were triggered on March 13, 2020, when President Donald Trump declared a national emergency under the Robert T. Stafford Disaster Relief and Emergency Assistance Act due to the spread of the coronavirus. Employers may now provide tax-favored financial assistance to employees who are affected by the coronavirus.

Reimbursable Expenses
Reinbursable expenses associated with the coronavirus may take many different forms, such as:

Unreimbursed medical expenses including co-pays, deductibles, vitamins, and supplements
Increased expenses associated with being quarantined at home (e.g., increased utilities and home office expenses, as discussed below)
Expenses associated with setting up or maintaining a home office such as enhanced internet connections, computer monitors, laptops, printers, office supplies, etc. (even if such expenses would not otherwise satisfy the home office deduction requirements)
Housing for additional family members, (e.g., transportation and living expenses for college students returning home including duplicative meal expenses)
Nonperishable food purchases/reserves
Increased childcare expenses
Expenses to enhance mental health and physical well-being from social distancing such as meditation apps and home health fitness
Alternative commuting means in lieu of mass transit

Nonreimbursable Expenses
Three broad categories of nonreimbursable expenses are:

Payments for expenses that are not reasonable and necessary
Payments that constitute an income replacement program (i.e., a payment for lost wages, lost business income, or unemployment benefits)
Payments that are reimbursed or reimbursable by insurance or otherwise
No Expense Substantiation
Due to the extraordinary circumstances surrounding a qualified disaster, employees are not required to account for or substantiate actual expenses in order to qualify for the exclusion, provided that the amount of the payments can be reasonably expected to be commensurate with the expenses incurred. Significantly, the reasonable belief provisions found in Subtitle C of the tax code do not apply to Section 139 payments; however, Section 139’s reasonableness provisions and the lack of a substantiation requirement have much the same effect as the reasonable belief provisions.

No Dollar Limit
Section 139 does not impose a dollar limit. An employer could provide an affected employee with a six-figure payment as long as the expenses in question are reasonable and necessary with respect to the coronavirus.

No Discrimination Testing
Payments are not subject to discrimination testing. Unlike various Section 132 provisions, Section 139 does not impose any discrimination rules under Section 139.

No Payroll Taxes or Reporting
Qualified disaster relief payments are excluded from gross income and wages for payroll tax purposes. In addition to being exempt from payroll taxes, such payments are not subject to information reporting on either Forms W-2 or Forms 1099-MISC.

No Deduction Limitations
Qualified disaster relief payments should be fully deductible. Even though the payments are neither taxable wages nor gross income, employers may reasonably take the position that the payments remain fully deductible to the same extent that they would have been if they were otherwise included in gross income or taxable wages. However, Section 139(h) denies “double benefits” with the likely result that self-employed individuals and other owner-employees may find their tax deductions limited if they are actually a recipient of a qualified disaster relief payment.

Cash Advances and Reimbursements
Although some tax advisers believe that qualified tax relief payments only apply to reimbursements, the better position is that Section 139 also encompasses cash advances to pay for covered expenses that the employer reasonably expects the employee to incur.

Section 132 Fringe Benefit Rules
Section 139 should override the provisions of Section 132 (regarding fringe benefits) to the extent that the provisions might otherwise cover the same payment.

Plan Documentation
A written plan document is not required or recommended. Nevertheless, given the benefits of tax-free status for qualified disaster relief payments, employers consider adopting an administrative system that validates such payments meet the Section 139 requirements. Such a system can include an application form and an affirmative statement from the employee that the requested funds are necessary for expenses associated with the coronavirus and confirms that such expenses are not reimbursable by insurance.

Audit Outlook
The IRS is not likely to audit a program that clearly limits payments to reasonable and necessary payments incurred as a result of the coronavirus. Similarly, although the vast majority of states follow the federal exclusion by defining state taxable income with reference to an individual’s federal taxable income, in the handful of states where a technical reporting requirement may exist for qualified disaster relief payments, we have not encountered any adverse audits that refuse to extend the same treatment at the state level.

Summary
Section 139 qualified disaster relief payments may be the most generous and easily administered of the various employee benefits provisions found in the tax code. In addition to some of the most favorable income and employment tax treatment of any provision of the tax code, the reasonableness provisions, the broad nature of reimbursable expenses, and the lack of any onerous substantiation requirement necessarily make Section 139 payments the first benefit that any employer should examine when trying to respond to the adverse financial impact that the coronavirus has on its employees.

David Fuller and Rick Stepanovic of McDermott, WIll & Emery/Bloomberg March 27, 2020

Qualifying health plan expenses may result in larger employment tax credits under the FFCRA and the CARES Act

Both the Families First Coronavirus Response Act (the FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act provide for payroll tax credits for the payment of certain employee wages until Dec. 31, 2020. Under both laws, the amount of these wages include "qualifying health plan expenses," which may result in a larger payroll tax credit.

Under the FFCRA, an employer is typically eligible for a fully refundable payroll tax credit that is equal to the qualified sick leave wages and the qualified family leave wages, plus allocable qualified health plan expenses paid between April 1, 2020 and Dec. 31, 2020.

Under the CARES Act, an employer whose operations is fully or partially suspended may be eligible for a payroll tax credit up to 50 percent of the wages paid (up to $10,000) between March 12, 2020 and Jan. 1, 2021. Again, these wages include allocable qualified health plan expenses.

Employers may offset the amount of their anticipated payroll tax credits under the FFCRA and the CARES Act against their deposit of employment taxes (including income tax withholdings) with the IRS. Since many employers are required to make these deposits with the IRS on a semi-weekly basis, employers should start determining their qualified health plan expenses as soon as possible.

Technical Jargon

Both the FFCRA and the CARES Act include the following provisions:

That the amount of the credit (under the FFCRA) or the amount of qualified wages (under the CARES Act) includes the employer's allocable "qualified health plan expenses.")
"Qualified health plan expenses" means "amounts paid or incurred by the employer to provide and maintain a group health plan (as defined in the Internal Revenue Code), but only to the extent that such amounts are excluded from the gross income of employees by reason of section 106(a) of the code.
The FFCRA and the CARES Act direct the Secretary of the Treasury to prescribe how qualified health plan expenses are allocated but also state that, "[e]xcept as otherwise provided by the Secretary, such allocation shall be treated as properly made if made on the basis of being pro rata among employees and pro rata on the basis of periods of coverage (relative to the periods such wages relate)."

Practical Advice

The provisions related to determining qualified health plan expenses for purposes of claiming payroll tax credits under either the FFCRA or the CARES Act are difficult to interpret. The following sections break these provisions down so that they are better understood. The first step is to determine which health plan expenses are eligible for a payroll tax credit. The second step is to allocate these expenses to the appropriate employees.

Eligible Health Plans

A "group health plan" under the Internal Revenue Code includes all plans that are subject to the continuation of coverage requirements under COBRA. As a result, the following employer-sponsored plans are included for purposes of determining the payroll tax credit under both the FFCRA and the CARES Act:

Medical/prescription drugs.
Dental.
Vision.
Medical flexible spending accounts (medical FSAs).
Health reimbursement arrangements (HRAs), except for qualified small employer HRAs (QSHRAs).
Employee assistance plans (other than referral-only EAPs).
Onsite medical clinics.
Eligible Expenses

Expenses incurred as a result of providing one of the above group health plans are only included for purposes of determining the payroll tax credit under the FFCRA and the CARES Act to the extent these amounts are excluded from the gross income of employees under the tax code. This includes amounts paid by the employer. It also includes amounts that are paid by employees through pretax salary reductions under a Section 125 Cafeteria plan. Amounts paid by employees on an after-tax basis, such as COBRA premiums, are not included for purposes of determining the payroll tax credit.

Allocating Expenses

The IRS issued a series of FAQs regarding the payroll tax credits under the FFCRA. The IRS also issued FAQs on the payroll tax credits under the CARES Act, but those FAQs don't address qualified health plan expenses. Since the statutory provision regarding the allocation of qualified health plan expenses is the same under the FFCRA and the CARES Act, it appears reasonable that the FAQs on how to allocate these expenses under the FFCRA would apply equally to the CARES Act.

Fully Insured Group Health Plans

The IRS's FAQs give the following three allocation methods with respect to fully insured group health plans:

The COBRA applicable premium for the employee typically available from the insurer (while the FAQs are silent on this, we do not recommend including the 2 percent administrative fee).
One average premium rate for all employees.
A substantially similar method that takes into account the average premium rate determined separately for employees with self-only and other than self-only coverage.
The FAQs only give an example of the second allocation method. Here is that example:

An Eligible Employer sponsors an insured group health plan that covers 400 employees, some with self-only coverage and some with family coverage. Each employee is expected to have 260 work days a year. (Five days a week for 52 weeks.) The employees contribute a portion of their premium by pre-tax salary reduction, with different amounts for self-only and family. The total annual premium for the 400 employees is $5.2 million. (This includes both the amount paid by the Eligible Employer and the amounts paid by employees through salary reduction.)

For an Eligible Employer using one average premium rate for all employees, the average annual premium rate is $5.2 million divided by 400, or $13,000. For each employee expected to have 260 work days a year, this results in a daily average premium rate equal to $13,000 divided by 260 or $50. That $50 is the amount of qualified health expenses allocated to each day of paid sick or family leave per employee.

Self-Insured Group Health Plans

With respect to self-insured group health plans, the FAQs give the following two allocation methods:

The COBRA applicable premium for the employee typically available from the administrator (again, while the FAQs are silent on this, we do not recommend including the 2 percent administrative fee).

Any reasonable actuarial method to determine the estimated annual expenses of the plan.

The FAQs do not, however, give any examples of the allocation methods for self-insured group health plans.

Exerpt from SHRM Artcile by: Tripp VanderWal © Miller Johnson
April 23, 2020

Carrier Links to On-Line Physician Visits

Below is a list of carriers and links to their respective on-line physician access to meet with a doc in the comfort of your own home.  With an expanded list of illness’ they are able to diagnose, treat and prescribe medications for, it’s one more way to keep you out of harm’s way.  In addition they will send the RX directly to your pharmacy. 

Carefirst: Video Visit

United Healthcare: Virtual Visits

Aetna: Telemedicine

Cigna: Telehealth

Kaiser Permanente: Video Visit

Hope you all are well.  And please share the link with your employees, familes, friends.

Thanks,

Ben 

MD Health Connection Emergency Enrollment Period Available Now!

MD Health Connection
Emergency Enrollment Period Available Now!

In an effort to prioritize health and safety and in response to Coronavirus, Maryland Health Connection opened an emergency special enrollment period for uninsured Marylanders.

You can enroll in a health plan through Wednesday, April 15, 2020. Coverage will be effective April 1, 2020, regardless of when a health plan is selected during that time period.

Medicaid enrollment is available all year.

How to enroll: 

Visit MarylandHealthConnection.gov or download the free "Enroll MHC" mobile app. When enrolling, consumers should request or select "Coronavirus Emergency Special Enrollment Period."

The online application is available daily from 6 a.m. to 11 p.m.

Free consumer assistance is available by calling 855-642-8572 weekdays from 8 a.m. to 6 p.m. Deaf and hard of hearing may use Relay.

While free, in-person assistance is still available in some areas of the state, we strongly encourage you to apply using the website, mobile app or by phone.

Is Coronavirus testing covered under a Maryland Health Connection plan or Medicaid? 

Yes. Health insurance companies are required to waive cost-sharing, including lab fees, co-payments, coinsurance, and deductibles for any visit to test for coronavirus at a doctor's office, urgent care center, or emergency room.

Can I qualify for the Coronavirus Emergency Special Enrollment Period even if I'm not sick?

Yes. All eligible, uninsured Marylanders may qualify for this emergency special enrollment period.

What do I need to apply?

Have these items ready when you apply. 

We encourage all residents to closely follow the Centers for Disease Control and Prevention (CDC) and the Maryland Department of Health (MDH) for all health-related coronavirus questions.