As we approach the new year, it's crucial to stay informed about the latest developments…
COVID-19 Update March 10, 2021
BREAKING NEWS! The House of Representatives passed the next COVID-19 stimulus bill at $1.85 trillion. On a strictly bipartisan basis, 100% democrats voted for it and 100% republicans voted against it. It now moves to the White House for President Biden’s signature, which is expected by Friday.
Furthermore, here’s what we learned during our NAPEO Federal Affairs Committee meeting:
The key matters that were discussed at length were the COBRA subsidies passed as part of the bill and the ongoing ERTC tax credit issues. Thus, we expect more details to come out very soon.
Eligibility for the COBRA subsidies, which provide 100% coverage for employees, is not based on anything solely COVID-19 related. It includes people that would normally be in their 18-month period of COBRA if they turned it down and were let go for any normal reason, or if they had their hours cut. Our understanding is that if your company is large enough to offer COBRA (over 20 employees) then you’re responsible for paying the premium and getting a credit back on your Medicare taxes for these premiums out of pocket. For those with less than 20 employees covered, the responsibility falls onto the carriers to pay the premiums and get the credit back from the IRS.
This new subsidy is available from April 1st until September 30th, 2021.
- Those who are entitled to COBRA coverage any time between April 1, 2021 through September 30, 2021 due to a loss of coverage under a group health plan resulting from involuntary loss of employment or reduction of hours, will have their COBRA premium due within this period fully subsidized.
In addition, there are instructions surrounding notices that must go out in a timely manner for COBRA availability. These rules obviously are being changed for this new subsidy and we will get you the new language as soon as possible. For our Delta clients, we will take care of these changes for you, and our benefits team will be in touch about how many people may be eligible for your company.
FFCRA credits were extended in December on a voluntary basis through the end of the 1st quarter of 2021, and it extended again on a voluntary basis by company until September 30th. They’ve also increased the amount that was capped at $10k to $12k for reimbursement. If you used your 10 days of leave in 2020, you now have the option to give employees 10 additional days of leave reimbursed by the FFCRA in 2021. Lastly, they also increased the eligibility of days that people can take off for this to include PTO for getting a vaccine and/or recovering from a vaccine shot.
The Employee Retention Tax Credit has been extended to the end of 2021, so if you had a reduction in revenue in any quarter comparative from 2019 to 2020 of at least 20%, you may be eligible for some major tax credits.
If you haven’t been following along, we’ve previously discussed the fact that Delta is part of a consortium that is working to find a way to make the ERTC process much smoother and more efficient. Hopefully, by switching from manual to electronic, instead of having to mail in returns and wait for the IRS to open your mail and respond, this will get the necessary dollars to those businesses struggling through the pandemic.
Last week, we met with the treasury department and it went extremely well. Initially, they thought we were there to complain about the lack of IRS response for any guidance for the ERTC program (which we were, but not our main focal point). We went through the issues small businesses are having getting the tax credits back in their hands and we brought credible evidence that the average wait for a refund is 7-9 months as a backlog. The whole point of the program is to keep those suffering businesses afloat, so making them wait an unreasonable amount of time for these monies is negating the efforts. They seemed to agree and will be taking our proposal to the new administration’s appointees in the IRS to see what can be done.
This week, we met with the IRS, and they had a dozen of their management team on the call, including their legal team. In typical IRS fashion, they did not react too much, and after we made our case, they ranted about how hard all these tax credits are on them and all the processes they must go through for each change that is made. At the end of the day, they said they would take what we proposed under advisement and get back to us.
Our consortium of business-based associations is putting together a grassroots effort to get the importance of this for small businesses to get these much-needed dollars through an easier process. We should have more info on this by the end of this week or early next week.
A couple of other items to note that are in this bill, unemployment subsidies of an additional $300 per week have been extended through September 6th. On the other hand, nothing was included in the bill about help the states that are devoid of these funds. There are 19 states currently that have borrowed substantial money from the federal government to keep paying people and nothing has been done to help get them subsidized. This is going to fall back on the business community eventually, and the last thing we need to recover from a pandemic is to get slammed with huge tax increases.
Another item those of you that offer a flexible spending account for childcare reimbursement, they have raised the limit in 2021 from 5k to $10,500. Economic Impact Payments of $1400; individuals earning up to $75,000 receive full amount, with payments phasing out entirely by $80,000 in income; couples making up to $150,000 receive $2,800, with payments phasing out at $160,000.
The SBA recently released supplemental documents containing critical guidance for the SVOG program, the $15 billion grant program for eligible, shuttered venues affected by the COVID-19 pandemic. The documents include:
It seems that the vaccine is starting to kick in around the country with more people getting access to it, thus the cases and deaths going down. Louisiana Governor John Bel Edwards announced that Louisiana residents aged 16 and older with certain health conditions are now eligible to receive the coronavirus vaccine. Further, anyone who works in a congregate living facility now qualifies for the vaccine.
SHRM released a few pandemic-related articles that we wanted to share, including: DOL Sent Independent-Contractor Proposal to White House for Review, IRS Clarifies Relief for FSA Carry-Overs, Stimulus Bill Provides Extensive Pension Funding Relief, and Fighting Pandemic Fatigue.
Last, but certainly not least, we want to congratulate my wife, Teresa for her accomplishment of being named to the Hall of Fame for the Women Business Enterprise organization this evening. We are so proud of you!
