Financial Relief Package Offers Support to O&P
The CARES Act, a $2 trillion financial relief package in response to the effects of the COVID-19 pandemic on the economy and the healthcare sector, was signed into law on March 27. The American Orthotic and Prosthetic Association (AOPA) summarized the package's benefits to O&P, as follows:
- $350 billion in aid for small businesses, much of which would be in loans through the Small Business Administration (SBA) and banks guaranteed by the federal government.
- The loans would be forgiven provided the businesses meet certain requirements, including limiting reductions in pay and layoffs, though with some flexibility for employers. (Applicants must make good faith certifications that coronavirus has impacted their business and that the loan is necessary for continuation of their business.)
- The loans can be used to cover payroll expenses, including salaries and compensation; various forms of paid sick, medical, or family leave; group health insurance premiums; state and local taxes assessed on employee compensation; rent; utilities; and interest paid on debt.
- Applicants that previously received a loan from another source for the same purpose are not eligible.
- Companies that secured an SBA loan since January 15 can refinance those recent loans under the terms and conditions of the special SBA coronavirus relief loans.
- An inspector general and congressional oversight committee (with members yet-to-be-determined) oversee how the money is spent.
- This funding is in addition to the assistance provided in recent legislation that authorizes approximately $2 billion worth of 100 percent guaranteed SBA loans, a portion of which SBA will forgive based on allowable expenses for the borrower. The SBA is already accepting applications for these funds.
- A refundable payroll tax credit for 50 percent of wages paid by employers to employees during the COVID-19 crisis. The credit is available to employers whose gross receipts declined by more than 50 percent when compared to the same quarter in the prior year. The credit is based on qualified wages paid to the employee. For employers with greater than 100 full-time employees, qualified wages are wages paid to employees when they are not providing services due to the COVID-19-related circumstances described above. For eligible employers with 100 or fewer full-time employees, all employee wages qualify for the credit, whether the employer is open for business or subject to a shut-down order. The credit is provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee. The credit is provided for wages paid or incurred March 13-December 31 and is not available to employers receiving Small Business Interruption Loans.
- Relaxes the limitations on a company's use of losses. The provision also temporarily removes the taxable income limitation to allow net operating losses to fully offset income. Congress hopes that these changes will allow companies to utilize losses and amend prior year returns, which will provide critical cash flow and liquidity during the pandemic.
- Allocates funding to support "short-time compensation" programs, where employers reduce employee hours instead of laying off workers and the employees with reduced hours receive a prorated unemployment benefit. This provision would pay 100 percent of the costs they incur in providing this short-time compensation through December 31.
- Creates a temporary Pandemic Unemployment Assistance program to provide payment to those not traditionally eligible for unemployment benefits (self-employed, independent contractors, those with limited work history, and others) who are unable to work as a direct result of COVID-19. It also creates an additional 13 weeks of unemployment benefits to help those who remain unemployed after weeks of state unemployment benefits are no longer available.
- Authorizes the Treasury Department to provide advance payment of tax credits that are available to private sector employers that are required to provide up to 12 weeks of coronavirus-related paid leave to their employees.
- Clarifies the limitation on compensation during paid sick days, stating an employer shall not be required to pay more than $511 per day and $5,110 in the aggregate for sick leave or more than $200 per day and $2,000 in the aggregate.
The healthcare provisions include:
- A temporary halt to the Medicare sequester from May 1 through December 31, which would have reduced payments to providers by 2 percent.
- Directions to the Secretary of Health & Human Services to develop a comprehensive and coordinated plan to identify workforce projection needs.
- Prevention of scheduled reductions in Medicare payments for durable medical equipment subject to competitive bidding. (This does not impact the January 1, 2021, scheduled implementation of Medicare competitive bidding for off-the-shelf orthoses.)
- Veterans who are eligible to receive a prosthetic device can receive care from private providers under a contract with the Department of Veterans Affairs during the public health emergency.