What the COVID-19 relief package means for ODs

March 27, 2020

Article

a vile labled covid19 sits atop 20 dollar bills and american flag

The new COVID-19 relief package recognizes the importance of optometry’s full inclusion in all federal health legislation and ODs’ role as physicians in the nation’s COVID-19 mobilization efforts. There are tax breaks and credits available for employers who keep staff on or provide paid leave during the crisis.

The year of the eye exam obviously started off much differently than anyone anticipated. As you have now no doubt heard, the U.S. Senate has overwhelmingly passed its third and most recent stimulus bill (with the House imminently set to vote), which will provide significant relief to ODs, their practices, and their patients during this turbulent time.

A special thanks to the American Optometric Association (AOA), without whose involvement this bill and the others before it would be significantly less beneficial for optometry!

Here is what the first three phases of the COVID-19 relief package mean for ODs.

Phase three (the Coronavirus Aid, Relief, and Economic Security Act or “CARES Act”)
This 880-page piece of legislation was the third COVID-19 relief package and was passed by the Senate. As of publication time, it awaits passage in the House and signature by President Donald Trump. Provided there are no amendments in the House, it injects nearly $2 trillion into the economy by providing assistance for ODs, their practices, and their employees in several ways, including:

• Temporarily suspending the Medicare sequester from May 1, 2020, until Dec. 31, 2020, resulting in a two percent increase in Medicare reimbursements to ODs and other Medicare providers during this period.

• Requiring the federal government to defer federal student loan payments (principal and interest) for six months without penalty through September 30, 2020, for optometry students and others, for all federally owned student loans.

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• Creating new 7(a) Small Business Administration (SBA) loans as part of the “Paycheck Protection Program.” Optometry practices, including sole-proprietorships, independent contractors, and other eligible self-employed individuals, may apply for loans through December 31, 2020, of up to $10 million. Many private lending institutions will participate in this program, and the federal government will guarantee the loans at 100 percent so eligibility to re-pay is not a consideration because the loans will be forgiven if the funds are used for legitimate business expenses (e.g., payroll expenses, paid sick or medical leave, insurance premiums, rent, interest on mortgages, utilities, and other debt obligations). However, the amount of loan forgiveness may be reduced by the number of employees no longer retained and/or by a significant reduction in employee salaries, so be careful. Additionally, any funds not used for legitimate business expenses must be repaid within 10 years.

• Adding an incentive to hire back employees who were laid off after February 15, 2020. Employers will not be penalized for having reduced their workforce for purposes of loan forgiveness, provided those workers are re-hired, and the cancelled debt with this loan forgiveness program will not be treated as taxable income. Further, it allows borrowers who received an Economic Injury Disaster Loan (EIDL) between February 15, 2020, and March 31, 2020, to receive assistance under this program, but after March 31, 2020, limits a borrower from receiving Paycheck Protection Program assistance as well as an EIDL for the same purpose.

• Offering $10K in emergency grants (essentially an advance on the EIDL loan) for eligible businesses suffering economic harm due to COVID-19 who apply for an EIDL that was created in the Phase Two COVID-19 Relief Package. Funds will be available within three days of loan application and must be used for legitimate business expenses (e.g. payroll, rent, mortgage payments, paid sick leave). These advance payments will not be required to be repaid, even if the EIDL is ultimately denied; however, the advance payments will be considered when determining loan forgiveness if the applicant transfers into the aforementioned SBA 7(a) Paycheck Protection Program.

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• Providing a one-time, up to $1,200 check to individual taxpayers (or up to $2,400 for married filers), that phases out beginning at $75K in adjusted gross income for single filers and at $150K for married filers, based on the taxpayer’s 2018 filed tax return; check amounts increase an extra $500 for every child. This will directly benefit most employees at optometry clinics, as well as ODs who personally qualify.

• Broadening telehealth regulations for Medicare beneficiaries to include new patients during the COVID-19 crisis.

• Authorizing the U.S. Treasury to provide small businesses with an advance tax credit during the crisis instead of waiting to be reimbursed quarterly for fulfilling the new paid sick and family medical leave requirements that were part of the Families First Coronavirus Act (i.e., Phase Two). Further, employer liability is limited to $5,110 in aggregate for sick leave, $2,000 in aggregate to care for a quarantined individual or child due to COVID-19 for each employee, and $10,000 aggregate for each employee under all leave. Re-hired employees who were laid off after March 1, 2020, are also provided paid sick and family leave.

• Creating a temporary “Pandemic Unemployment Assistance Program” through December 31, 2020, providing access to unemployment benefits for both self-employed ODs and independent contractors, as well as part-time workers, who are unable to work as a direct result of the emergency.

• Providing an emergency increase in unemployment compensation benefits by adding $600 per week in federal dollars to existing state benefits for up to three months and providing funding to pay the cost of the first week of unemployment benefits through December 31, 2020, for states that choose to pay recipients as soon as they become unemployed instead of waiting the current requisite one-week period.

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• Providing a refundable payroll tax credit for 50 percent of wages paid by employers to employees during COVID-19 for employers whose operations were fully or partially suspended due to a COVID-19-related shutdown order, or whose gross receipts declined by more than 50 percent when compared to the same quarter in the prior year.

• Waiving the 10 percent early-withdrawal penalty for distributions up to $100K from qualified retirement accounts for legitimate coronavirus-related purposes as approved by the Treasury Secretary and made on or after January 1, 2020, and making the income attributable to the distribution subject to tax over three years, with the taxpayer allowed to recontribute the funds to an eligible retirement plan within three years without regard to that year’s cap on contributions. Additionally, the provision provides flexibility for loans from certain retirement plans for coronavirus-related relief.

• Allowing employers and self-employed individuals to defer payment of the employer share of the Social Security tax over the following two years, with half due by December 31, 2021, and the remaining half by December 31, 2022.

• Amending definitions and rules regarding certain net operating losses for tax purposes.

• Creating the new Public Health and Social Services Emergency Fund to provide grants to Medicare- or Medicaid-enrolled suppliers or providers, including ODs, for health care-related expenses or lost revenues attributable to the pandemic that are not otherwise reimbursed.

• Creating the Small Health Care Provider Quality Improvement Grant Program to make ODs eligible for five years of grant funds to better connect with other healthcare providers in their area to help increase care coordination, enhance chronic disease management, and improve health outcomes.

Related: Eyecare practitioners urged to provide emergency care only amid COVD-19
• Providing for Small Business Loan Repayment Assistance in the form of a new subsidy for certain existing loans (e.g., SBA 7(a), 504, and Microloans).

• Establishing a Ready Reserve Corps through the United States Public Health Modernization Act to insure enough trained doctors (including ODs) and nurses are available to assist in public health emergency responses.^1,2,3

A special thanks to the American Optometric Association (AOA), without whose involvement this bill and the others before it would be significantly less beneficial for optometry!

Here is what the first three phases of the COVID-19 relief package mean for ODs.

Many thanks to Matt Willette, AOA Director of Congressional Relations, and his staff, for their influence and work on behalf of optometry with this exhaustive piece of legislation.

Phase Two (aka the Families First Coronavirus Act)
This multi-billion-dollar piece of legislation was passed by Congress and signed by President Donald Trump on March 19, 2020.

It includes provisions to:
• Require all healthcare insurers (both private and government-run) to cover all coronavirus testing costs in their entirety, without cost sharing, and at no cost to the patient, for those with medical coverage.

• Expand unemployment insurance coverage.

• Ensure paid sick leave for hourly employees-businesses with <500 employees were required to pay up to 80 hours of emergency paid sick leave to full-time employees (and lesser amounts for part-time employees) who miss work due to self-quarantine, to seek preventive or diagnostic care, or receive treatment for COVID-19. Eligible full-time employees and pro-rated, part-time employees were granted up to 80 hours of paid time off at two-thirds of their regular pay in order to care for a family member or to care for a child whose school has closed, or if their child care provider is unavailable due to COVID-19.

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• Ensure 12 weeks of family leave wages for eligible employees (in the form of two weeks of unpaid leave, followed by 10 weeks of paid leave) at no less than two-thirds of the employee’s usual pay, in order to care for a child in the event of school closure or child care provider being unavailable due to COVID-19.

In the case of the paid sick leave and family leave wage provisions, the employee’s wages and the employer’s contribution to employee health insurance premiums during the period of leave were originally to be paid up front by the employer, then be fully reimbursed by the federal government within three months through a refundable tax credit that would count against the employer’s payroll tax.

Employers originally would have also been required to submit emergency paid sick leave expenses as part of their estimated quarterly tax payments. Should actual expenses exceed the tax liability, a refund would be furnished from the IRS. However, recall the CARES Act (i.e., Phase Three) changed these requirements to provide an advance tax credit up front and cap the aggregate leave an employer is liable for to ensure employers have enough payroll cash on hand to meet these paid leave requirements. Businesses with fewer than 50 employees may be eligible to qualify for a narrow exemption regarding the paid leave requirements if the Department of Labor determines that providing these benefits would jeopardize the viability of the business.2

Phase One: Passed by Congress, signed by President Trump on March 6, 2020
The first COVID-19 Relief Package was an $8.3 billion stimulus designed to, among other things:
• Set aside funding for COVID-19 lab tests, vaccine research, and general outbreak response.

• Allow the SBA to offer new and expanded, low-interest federal disaster loans (the aforementioned EIDL loans) which can be used for payroll expenses, accounts payable, fixed debts, and other expenses related to COVID-19. State governors must request EIDL assistance, but once the declaration is made within the state, the loans were to be available up to $2 million at an interest rate of 3.75 percent, for small businesses without credit available elsewhere.

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• Provide directives to relax pre-existing restrictions on the use of remote and telehealth services for Medicare beneficiaries.2,4 These visits must be initiated by the patient (but providers are allowed to inform beneficiaries of their availability) and initially were limited to established patients only (i.e., those seen by a doctor at that tax ID number within the past three years) until the CARES Act (i.e., Phase Three) passed. In addition to online patient portals and telephone communications, platforms such as FaceTime and Skype, among other similar videoconferencing options, may be used to provide some types of “virtual check-ins” and/or telehealth services during the pandemic. Details of the appropriate coding and billing for the various options allowed are beyond the scope of this article.

Note that throughout the process, interests have been at work that would have significantly restricted optometry’s inclusion in almost every one of these pieces of legislation. Congress continues to consider additional stimulus measures, so Phase Four is likely at some point. The AOA has sponsored additional bills in both the Senate and the House to further provide specific relief for ODs, their staff, and their practices, so get involved today to insure their passage.

As always, consult your CPA, financial advisor, and/or tax attorney for more specific guidelines and recommendations on how you can best take advantage of these provisions, and above all, stay safe!

More by Dr. Wroten: Chris Wroten, OD: New technologies and pharmacology

References:

1. Congress.gov. S.3548 - CARES Act. Available at: https://www.congress.gov/bill/116th-congress/senate-bill/3548. Accessed 3/27/20.
2. American Optometric Association. AOA Mobilizes for Doctors in National Response to Pandemic. Available at: https://www.aoa.org/news/advocacy/aoa-mobilizes-for-doctors-in-national-response-to-pandemic. Accessed 3/26/20.
3. Kaiser Health News. Senate Overwhelmingly Passes House’s Coronavirus Bill, Immediately Switches Attention to ‘Phase 3’ Stimulus Package. Available at: https://khn.org/morning-breakout/senate-overwhelmingly-passes-houses-coronavirus-bill-immediately-switches-attention-to-phase-3-stimulus-package/. Accessed 3/26/20.
4. American Optometric Association. Congress’ COVID-19 Relief Package Recognizes Optometry’s Physician Role. Available at: https://www.aoa.org/news/advocacy/aoa-secures-legislative-win-provides-direction-medicare-telehealth-services. Accessed 3/26/20.