Good news on the PPP tax burden from loan forgiveness.  The new Stimulus bill passed on December 27, 2020, allows businesses that obtain PPP loan forgiveness to write off the payroll and other expenses authorized under the original PPP loan rules.  

What does this mean for your business?

In short, once you obtain loan forgiveness on your PPP loan proceeds, there will be no tax associated with the loan forgiveness assuming you utilized the funds for authorized purposes like payroll and rent. Basically, Congress decided to allow small businesses to not only not have to pay the PPP loan back but also get a tax benefit for all of the expenses that were paid with the PPP money.  This legislation has overturned the prior IRS position that we were basically all going to have to pay taxes on the PPP money.  

What about the EIDL grant that I received?

The new law basically allows anyone receiving the EIDL grant to disregard the rules regarding setoff for loan forgiveness.  Prior to the new Stimulus bill, the EIDL grant ($1000 - $10,000 depending on your number of employees) was supposed to be deducted from the amount of PPP eligible loan forgiveness.  The new law eliminates that requirement and no longer ties the EIDL grant to your business’s PPP loan forgiveness amount.  

What’s up with the second bite at the apple?

The new law allows for small businesses that can meet certain requirements to obtain an additional PPP loan using the same calculations that were used to obtain the first PPP loan.  In a nutshell, you may qualify for the same amount of money as you did in your first PPP if you meet the requirements.  Some basic requirements:

• You have already used the first PPP loan funds for authorized purposes;

• You have 300 or fewer employees;

• You have a 25% gross revenue decrease from a quarter in 2019 versus a quarter in 2020 or more generally a 25% total reduction in gross revenue from 2019 to 2020 if you don’t track your revenue quarterly (PPP funds from the first loan don’t count towards gross revenue)

What should we do?  

The 2nd PPP loans will only be processed by community banks, to begin with so it will be important to get in the right line (i.e. go get a community bank to help you with your second application or you will be at the back of the line waiting for larger commercial banks to be allowed to submit applications).

Republic Healthcare will continue to work hard to bring value to its clients not only through providing needed ancillary service and revenue opportunities but also through watching out for our client’s needs in today’s complex business environment.  We are accepting new clients daily.  Please feel free to reach out if we can help you or your organization today.

Insurance Companies Have a Spending Problem. Here’s How to Solve It.

Under the Affordable Care Act, insurance companies are required to spend at least 80-85% of their premiums on medical care, clinical services, and quality improvements for their insured individuals and employer groups. The remaining 15% may be used for administrative costs and profits, including executive salaries, overhead, agent commissions, and marketing. Anything related to the operation of their business sits outside that 85%.

If the MLR standards are not met, a rebate will be paid back to the customer.

In a normal health environment, the MLR provides increased value to consumers and transparency on the part of insurance companies. During a pandemic, the MLR leads to writing huge checks in the form of rebates and risking the poor public perception that premiums are too high and of little value.

Making Up the 85%: Medical Expenses During COVID-19

At the beginning of the Coronavirus outbreak, the American College of Surgeons (ACS) released a set of guidelines advising hospitals to postpone elective surgeries. This was a necessary effort to conserve critical resources and lessen the risk of contagion. But, it also meant that billions of dollars worth of medical expenses to pay for these optional operations were no longer being spent by insurance companies.

Despite the perceived increase in medical expenditures due to COVID-19, insurance companies typically spend 60-70% of their medical expenses on these elective surgeries.

With these procedures being canceled or postponed, the bulk of the 85% reserved for medical care is not being spent during a pandemic. Meaning, insurance companies will be paying back significant portions of their premiums.

In fact, in this year alone, insurance companies with Affordable Care Act plans are giving back a record $2.6 billion. The goal and the challenge for insurance companies during these unprecedented times is to get as close to that 85% as possible. Otherwise, they are not going to be able to utilize that money. As costs go down, the ability to retain profit goes down with it.

What roles will they play for your business?

As businesses determine their post COVID-19 opening strategy, it’s clear that the steps taken today will have a long-lasting impact on reputation and business performance for the future. Where many business owners falter is figuring out exactly what those steps are and how to take action today to ensure business doesn’t become stagnant and crumble for the remainder of 2020.

THE FIRST STEP IS TO IDENTIFY YOUR STAKEHOLDERS.

These are people who are acutely affected by your organization and who have a direct interest in your company’s success following COVID-19.

THE SECOND STEP IS TO UNDERSTAND THE WAYS YOU CAN BEST COMMUNICATE AND COLLABORATE WITH YOUR STAKEHOLDERS.

The Back-to-Work Movement is a complex process with a significant and varied group of stakeholders. Part of your task today is to formulate methods for collaboration amongst your stakeholders in order to bring necessary confidence to workers and customers. The challenging part of this process is that there are so many stakeholders. So, we need to start at the macro level.

STEP THREE IS INSTILLING CONFIDENCE AMONG YOUR PARTNERS, WORKERS, AND CUSTOMERS WITH A RE-OPEN FOR BUSINESS ACTION PLAN THAT APPLIES INDUSTRY-SPECIFIC GUIDELINES AND PROTOCOLS.

From a distance, we can see that one of the largest groups of affected stakeholders will be those businesses that are directly involved in providing a safe, secure environment at the workplace.

1. Real estate holding companies

2. Property management companies

3. Cleaning and janitorial service providers

4. Workplace redesign

5. Brokers, tenants and landlord representatives

6. Food service

7. Security

8. Maintenance

We assume tenants will have some resistance to directly sourcing and shouldering some of this burden that traditionally falls within the scope of the stakeholder’s perceived responsibility. Leadership from these various identified stakeholders will need to work together to develop a cohesive plan and then communicate clearly and often to build the sense of security necessary to bring back the people.

STEP FOUR IS ESTABLISHING PLANNING MEETINGS AMONGST THE STAKEHOLDERS to review best practices and determine the responsibilities of each service provider and how change in service can dovetail with the operation in total. All planning should be based on clinically driven guidelines with an eye towards practical implementation.

Tenants will look to these stakeholders as trusted advisors to help them navigate the safety and security of their employees.

Survive Today. Grow Tomorrow.

The stakeholders in the real estate space who implement the most visible and confidencebuilding solutions will grow through this challenging time-period and be better poised to take advantage of opportunities in the future market.

Vendors are currently offering unique solutions to the problems facing the industry. Dr. Steven Schnur, the driving force behind the “I’m Healthy Today” app, states: “From nanotechnology-applied cleaning and surface protect that lasts for months while fighting microbes mechanically, to physician-driven compliance programs that provide turn-key solutions for tenants to bring employees back to work, creative solutions to the problems we face are going to be a driving force in providing leadership with the tools necessary to build confidence in their brand and drive people back to the office, factory or other place of business.”

Implementation of a clear, concise plan that manages people’s privacy and security, along with clinical-based decision making, will be the hallmark of stakeholders who manage this challenge successfully.

The author of this article, Brian Panessa, is a healthcare attorney and Co-Founder of Republic Healthcare. Republic relieves stakeholders from the liability associated with developing and maintaining their own Back-to-Work Plan. Learn more about our unique turn-key solutions, clinically driven guidance, and specific plan implementation at www.republic.healthcare/reopen

See the Press Release: https://www.businesswire.com/news/home/20200520005725/en/Republic-Healthcare-Launches-Comprehensive-Reopen-Business-Program

If you are a Medicare Provider and you billed Medicare Fee for Service in 2019, then you will have received a portion of the $30 billion CARES Act Provider Relief Fund in early April. 

As a recipient of this disbursement, there are protocols in place that you need to make sure you follow in order to avoid future penalties, including the entire recoupment of funds paid to your organization. Providers who receive funds from the general distribution (the initial $30 billion) have to sign an attestation confirming receipt of funds and agree to the terms and conditions of payment and confirm your CMS cost report.

To make your job easier and to save you from a headache of legal jargon, our co-founder and Healthcare Attorney, Brian Panessa, has provided a free analysis and checklist for providers. Download the analysis below and please visit https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/index.html for further information regarding your relief payments.

Want to see if you received funding from the HHS Provider Relief Fund?

Brian Panessa

COVID-19 poses one of the greatest challenges to healthcare providers in generations. To successfully navigate this pandemic, healthcare providers need to prepare for both the crater and the spike in demand for healthcare services that is expected in the months to come.

To help you begin your preparation, the Republic team has been working hard to develop an understanding of the CARES Act- Paycheck Protection Program (PPP) SBA 7 (a) Loan Program with forgiveness and cancellation for eligible expenses.

Furthermore, in the coming days we will be unveiling a comprehensive roadmap on how facilities can navigate the unique challenges that COVID-19 presents, and you can download step one of that roadmap below! We hope it helps, and are committed to helping healthcare providers in any way we can during these unprecedented times.