Wednesday, March 31, 2021

Eligible Employers Have More Time to Apply for PPP Loans

Employers that need help covering payroll costs during the pandemic will have an additional 60 days to file a Paycheck Protection Program (PPP) application under a bill President Joe Biden signed into law on March 30.

The application period was set to close on March 31, but the PPP Extension Act of 2021 gives eligible employers until May 31 to apply.

The PPP is designed to help struggling businesses with 500 or fewer employees keep workers employed during the COVID-19 crisis by providing loans that are forgivable if certain criteria are met. The program aims to "provide a direct incentive for small businesses to keep their workers on payroll," according to the U.S. Small Business Administration (SBA), which oversees the program.

Employers should note that the American Rescue Plan Act (ARPA), which was signed into law on March 11, added $7.25 billion to the PPP and expanded the program to cover more nonprofits and digital media companies.

Michael Mahoney, an attorney with Ogletree Deakins in Morristown, N.J., said the intent behind ARPA is to expand eligibility and enable access to loans for businesses that continue to be severely impacted by the COVID-19 pandemic.

ARPA "also affords some recipients of Shuttered Venue Operator [SVO] grants eligibility for PPP loans, and on a more technical note, makes changes to payroll cost exclusions," explained William Eck and Stanley Jutkowitz, attorneys with Seyfarth Shaw in Washington, D.C.

Expanded Coverage

"The American Rescue Plan Act expands the types of tax-exempt organizations eligible for PPP loans," Eck and Jutkowitz noted. Under the act, all types of tax-exempt organizations are eligible for PPP loans, except certain social-welfare organizations, such as homeowners' associations. Tax-exempt organizations are subject to size and lobbying limitations. Depending on the organization type, the size limit is 300 or 500 employees per physical location. ARPA also extended eligibility for PPP loans to certain internet news publishers.

The act revised prior legislation to allow businesses that receive a PPP loan after Dec. 27, 2020, to apply for an SVO grant if conditions are met. SVO grants are also administered by the SBA and apply to small theaters, museums, live venue operators and some additional businesses.

"Specifically, if a PPP borrower receives a first draw or second draw PPP loan after Dec. 27, 2020, the amount of any subsequently approved SVO grant will be reduced by the amount of the first draw or second draw PPP loan," Eck and Jutkowitz said. "If a borrower receives both a first draw and second draw PPP loan after Dec. 27, 2020, the amount of any subsequently approved SVO grant will be reduced by the combined amount of both PPP loans."

Mahoney noted that ARPA focused on providing funding to smaller businesses that had not previously received relief. "This includes the lifting of an eligibility bar on small-business owners convicted of non-fraud felonies."

Loan Eligibility

Most businesses are eligible for a first loan if they employ 500 or fewer employees. However, businesses that employ more than 500 workers may be eligible if they meet the SBA's size standards for their industry.

Employers may be eligible for a second draw if they: 

Have no more than 300 employees.

Received a first draw PPP loan and used the full amount only for authorized uses.

Can show at least a 25 percent reduction in gross receipts between comparable quarters in 2019 and 2020.

Patrick Dennison, an attorney with Fisher Phillips in Pittsburgh, noted that the latest FAQs make clear that applicants may not use the SBA's established size standards or the alternative size standard to qualify for a second draw PPP loan, though there are a few, narrow exceptions for specific business types. 

"In general, the size eligibility requirement for Second Draw PPP Loans are narrower than the size eligibility requirement for First Draw PPP Loans," the SBA said. "With some exceptions, an applicant is eligible for a Second Draw PPP Loan only if it, together with its affiliates (if applicable), employs no more than 300 employees."

Loan Forgiveness

The covered period for loan forgiveness begins on the date the loan was originally disbursed and ends on a date selected by the borrower that is at least eight weeks—and not more than 24 weeks—after the date of loan disbursement, he explained.

Employers can apply for loan forgiveness if the following criteria are met during the covered period:

Employee headcount and pay levels are maintained.

Loan funds are spent on payroll costs and other eligible expenses.

At least 60 percent of the funds are spent on payroll costs.

For the second draw, employee headcount and compensation levels must be maintained in the same manner as required for the first draw.

First draw and second draw PPP loans "can be used to help fund payroll costs, including benefits, and may also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations," according to the SBA. Some payroll expenses are excluded, such as federal employment taxes and payments to independent contractors.

Mahoney recommended that businesses start compiling the information needed to submit a loan forgiveness application during the covered period. "This will streamline loan forgiveness and ensure that the business is able to make informed business decisions over the course of its loan."

Employers should carefully review information on the SBA and Treasury Department websites. "The most common mistake employers make concerning PPP loans is failing to keep up with the changes in rules or guidance," Dennison noted.

Excerpt for SHRM article dates 3-31-21

Tuesday, March 16, 2021

New Covid Legislation to provide COBRA subsidies

One of the more pertinent provisions in ARPA is the impact it has on COBRA subsidies moving forward. The legislation offers federal subsidies for COBRA premiums at 100 percent coverage. These subsidies apply from April 1 to September 30, but they are not retroactive.

Organizations will be required to cover the monthly premium expense but will be able to reimburse these expenses through a quarterly credit against payroll taxes. If the overall amount an employer pays for subsidized coverage is greater than its quarterly tax liability, it may claim a refund. One major component of this subsidization that sets it apart from a normal COBRA-election period is that it allows qualified individuals to make a prospective COBRA election for the period beginning April 1 without requiring payment of premiums retroactive to the original loss of coverage.

In regards to eligibility, any employee who lost health coverage for qualifying reasons between November 1, 2019, and September 31, 2021, could take advantage of COBRA subsidies. More specifically, these subsidies will be available to any previously covered employee or family member who may have lost coverage due to involuntary termination or reduction of hours and are still within their 18-month eligibility period. Any individual who loses their job from now until September will be able to instantly elect to stay on their employer’s health plan. However, as previously mentioned, an individual is only eligible if their termination was involuntary. It is also available to those who did not elect COBRA when initially eligible, or anyone who elected but subsequently dropped coverage. 

Subsidized coverage will terminate if the qualified individual exhausts the 18-month COBRA period prior to September 30. It could also end if the individual becomes eligible for coverage under another group health plan during the subsidy period or becomes eligible for Medicare. Additionally, since COBRA-election deadlines were already extended as a result of the pandemic, many individuals are still within their original COBRA-election periods. 

Those who are eligible under these parameters can sign up during a 60-day SEP beginning April 1. Plan administrators will be required to amend existing COBRA notices and share a separate document with forms necessary for the employee to establish eligibility, but they must act quickly due to the relatively short timeframe. For efficacy’s sake, organizations should begin identifying potentially eligible employees as soon as possible.

Several details of the rollout of this will be decided in regulatory guidance from the relevant federal agencies. We anticipate this federal guidance to include precisely how to set up these provisions, likely prior to the implementation date of April 1. Specifically, the Treasury Department may permit an advance credit for employers, while the Department of Labor is expected to issue model COBRA notices addressing the subsidy.  

Excerpt from NAHU Article dated March 12, 2021

Friday, March 5, 2021

Sign-ups for Biden's Obamacare special enrollment period nearly triple

 More than 206,000 people signed up for Affordable Care Act policies on the federal exchange in the first two weeks of the special enrollment period ordered by President Joe Biden, federal data released Wednesday shows.

Uninsured Americans who want to buy 2021 coverage on could start doing so on February 15, thanks to an executive order Biden signed in January. Special enrollment runs until May 15. Most states that operate their own marketplaces are also extending their enrollment seasons.

"These numbers are an encouraging sign — but we can't slow down until every American has the security and peace of mind that quality, affordable health coverage provides," Biden said.

Typically, signing up for coverage outside of the traditional enrollment period in the fall is restricted to those who lose their job-based policies or have a change in status, such as a divorce. Last year, only 76,000 people picked Obamacare plans during the second half of February, according to the Centers for Medicare and Medicaid Services, which runs the federal exchange.

Excerpt from article By Tami Luhby / CNN

Tuesday, December 22, 2020

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

Monday, December 14, 2020

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. 


Wednesday, October 21, 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.


Tuesday, July 21, 2020

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