As we have stated often, clarification on the new laws is coming very slowly and what we tell you at one moment may be revised the next.  This is one of those moments.  And it may be good news or bad news to you, depending on whether you wanted to put the expanded Family Leave Phase 2 provisions in effect, or you wanted to be excluded from them for cash flow purposes.  Our previous post indicated, to the extent your practice would remain viable, and to the extent that you have staff at home with minor children, that you must comply with the Phase 2 expanded Family Leave provisions.  It also stated that there was some talk that Dentists could be excluded from the provisions as healthcare providers but that looked unlikely.

New interpretations from an employment attorney are now leaning the opposite way—that dentists are specifically included as “health care workers” for this purpose and therefore excluded from the provisions of the bill.  REMEMBER—WE ARE STILL TALKING ABOUT LAST WEEK’S PHASE 2 BILL.  THERE IS NO EXPECTATION YOU WILL BE EXCLUDED FROM THE PHASE 3 BILL.  We are still of the thought, that the intent of the law was to cover as many small business employees as possible and that dentists will eventually be brought under this mandate.  Additionally the ADA is currently petitioning the Secretary of Labor to request that dentists not be exempted.  This is definitely not a settled issue but we want to make sure you are fully informed.

But remain calm, when Phase 3 is finalized this may all be moot since the purpose of that relief package is to help pay payroll.  One way or another, there is expected to be a way to pay this large expense or recoup what you have already paid out, while you are unable to collect patient fees to cover it!

Stay tuned!

TAX REFUNDS:  Our deadline this year to guarantee your tax return was completed by the normal due date was February 20, 2020.  Ordinarily we process returns on a first come, first served basis.  But these are not ordinary times.  If you participated in Tax Planning with us and are anticipating a refund, or if you typically get a refund and are expecting one this year also, it is not too late to send your data.  Get it to us and we will put you on our priority list!  If possible, please send your data electronically since most of our workers are remote at present.  That will get your data into our system in the fastest manner. Send information securely HERE.  Please know we are doing everything we can to help you through this stressful time.

We are currently not focusing on returns with expected tax balances due since it would be unwise for you to part with the cash right now and those returns are not due until 7/15/20.  If you are expecting to owe, please be patient with us as we help your fellow colleagues obtain the refunds they are due.

Your banks may have been required to inform you, or have been helpfully informing you, of an SBA loan product called an Economic Injury Disaster loan (EID).  This is normally a great option in times of economic crisis and we are not opposed to this type of loan option under normal circumstances.  BUT RIGHT NOW PLEASE WAIT.  Phase 3 of the COVID-19 relief which is expected to be passed imminently is expected to have a different SBA provision that will allow you to obtain a loan to cover your payroll and some other costs (rumored as rent and loans) which, if used for that purpose, CAN BE FORGIVEN after some time period.  The EID program does not have that provision.  The big difference?  The EID loan must be paid back and the Phase 3 loan to some degree will not (again, not a sure thing but very likely).  If you obtain and use EID money for your payroll, etc, it cannot be forgiven even if you also obtain a Phase 3 loan.  Also note that the Phase 3 provisions are expected to be retroactive to 3/2 (again, not a sure thing but likely).  We are certain your bankers are acting in good faith to help you through this crisis and relieve your anxiety by providing solutions.  But PLEASE BE PATIENT.  ACCEPTING AND USING THAT LOAN COULD COST YOU $$$$.  At the most, it would be ok to begin the application process to have that loan as a backup plan, but don’t close the loan until we learn more about Phase 3.  WE PROMISE TO KEEP YOU UPDATED.

Delta Dental is offering advance payments to dentists in some states.  Washington and Iowa are confirmed, but no other states are known at this point.  IF YOU ACCEPT DELTA DENTAL CONTACT THEM AND SEE IF THEY WILL OFFER YOU THE PROGRAM.  It’s called the Reimbursement Advance Program (RAP) in Washington or the Advance Claims Payment Program (ACPP) in Iowa which means it’s to some degree state specific.  Let us know if you are successful and we’ll spread the news.

If your practice has one, contact your Third Party Administrator (TPA) immediately to ask for a freeze on the plan.  You can re-evaluate it in the fall and make an informed decision at that time after the dust settles from COVID-19.  Because of the downturn in the markets, if proper precautions are not taken the required contribution in 2021 could be PAINFULLY high.  Additionally there are major penalties for non-funding or underfunding which would add to the burden if you are unable to meet the required contribution amount. 

Do not let this slip your mind in the chaos of the current situation.

This is a news alert we just received.  It is unconfirmed and unedited.  The most important aspects as it relates to your practice are in bold and italicized.  Please note the important caveat about retaining your payroll level for the period 3/1/20-6/30/20.  Practices that have already dismissed their employees will not have the required retained payroll level.  For those that have made this change recently you may be able to reverse that decision in light of this coming legislation, in an effort to return your payroll to its normal level.  This is the main reason we are advising our practices at the moment to continue to keep their employees on staff for a few more days until this is finalized.  We want you to be able to take advantage of these funds and allow your staff to receive a higher wage during the closures than they would receive on unemployment, essentially at no cost to you.   If you have worked with many of our team members here at E&A you know how great they are and because of that, they are invaluable to us.  We are sure your team is invaluable to you, as well and we want to help you make sure they’re taken care of. 

We do not know how the final provisions will play out—whether in line with the information below or not.  But this is consistent with other reports we are hearing and this is the most clear and succinct summary we’ve seen.  Please pray that our leaders in the house and senate can put their politics aside and focus on the good of the people and small businesses that support this country.  Thank you again for our friends and colleagues in the ADCPA (www.adcpa.org ) for the knowledge sharing.

A second SBA loan relief program is currently being considered by Congress. The United States Senate is attempting to finalize the Keeping Workers Paid and Employed Act (“KWPEA”) which is Division A of the Coronavirus Aid, Relief, and Economic Security Act (“CARES”) to aid small businesses through an expansion of SBA 7(a) loans. The program is intended to incentivize small businesses to retain employees by making a portion of the loans forgivable. This proposal would be retroactive to March 1, 2020, to help bring workers who may have already been laid off back onto payrolls.  

The proposal allocates $300 billion to fund these SBA 7(a) loans. Eligible businesses will be those businesses with 500 employees or fewer, unless the covered industry’s SBA size standard allows over 500 employees. View size standards here. Not for-profit entities will also be eligible. Under the proposal, if the small business retains its employees and payroll levels during the covered period (March 1, 2020, through June 30, 2020), the portion of the loan used to cover payroll and payments on pre-existing debt would be forgiven. Further, employers with tipped employees would receive forgiveness for additional wages paid to such employees during the covered time. The amount of the loan will be tied to a monthly payroll; mortgage, rent, and utility payments; and other debt obligations over the previous year. The maximum loan amount would be $10 million. The allowable uses of 7(a) loans will be expanded to include payroll support, such as paid sick or medical leave, employee salaries, mortgage payments, and any other debt obligations. The proposal also waives borrower and lender guarantee fees. It is also contemplated that that the SBA Express working capital loans will be increased from $350,000 to $1 million through December 31, 2020, after which point the Express loan will be in the maximum amount of $500,000.

This proposed program does not allow a borrower who receives this loan for employee salaries, payroll support, mortgage payments, and other debt obligations to receive an SBA Economic Injury Disaster Loan (“EID Loan”), for the same purpose, or commingle funds from another loan for the same purpose.

SBA 7(a) loans are currently made by approximately 1,800 banks, credit unions and other lending institutions nationally. This large network should expedite the processing of these 7(a) relief loans. To encourage lending institutions to make these loans, the government guarantee of 7(a) loans will be increased to 100% through December 31, 2020, at which point guarantee percentages will return to 75% for loans exceeding $150,000 and 85% for loans equal to or less than $150,000.  

It is likely that what is being proposed will be modified prior to approval. As more information becomes available, this alert will be updated.

PATIENT APPOINTMENT REMINDERS:  If you are using a software or cloud-based system to send appointment reminders for hygiene don’t forget to put a pause on them. Take the opportunity instead, if possible, to send a message to your patients about your plans to reopen, reschedule, etc. and show them support in what is likely their time of hardship also.

UPDATE ON PHASE 2-THE FAMILY LEAVE EXPANSION PASSED LAST WEDNESDAY:  We have read numerous articles, conferenced with colleagues all over the country, consulted attorneys and other specialists and one thing is certain…the provisions of the bill are unclear.   All of that to say, we are providing this information because we know you’re hungry for it, but please understand it is only our best understanding at the moment.  That understanding may change drastically when the DOL issues formal regulations interpreting the emergency leave provisions, which are said to be “forthcoming.”  We are giving you our best information; but no one yet really knows exactly what the provisions mean—to dentists specifically—and that includes us. 

WHEN IT GOES INTO EFFECT. 
The thought has been that the law goes into effect on 4/2/20.  Actually it goes into effect no-later-than 4/2/20 which means you can put it into place immediately if you choose. 

WHICH BUSINESSES MUST COMPLY. 
Employers with fewer than 500 employees.  This means you. 

WHAT LEAVE IT COVERS. 
Well it specifically covers your employee who has COVID-19, who might have COVID-19 or might have been exposed to it, or who is caring for someone who has COVID-19.  So far we haven’t heard from any of you with this situation.  So let’s move to the most likely reason—an employee who must stay home to care for a minor child whose facility (day care, school, etc) has closed due to COVID-19.  (There are conditions for the staff member to be considered an “eligible employee” but the preceding was a simplistic explanation and your average employee is going to be eligible.) 

NOTE:  This means it does not cover the employee who is home sick with any other kind of illness.  And it does not cover the employee you sent home due to lack of work.

WHAT YOU MUST PROVIDE. 
* The first 10 days may be unpaid, but an employee may elect to use paid vacation, personal leave or sick leave for the unpaid 10 day period.

* The next 10 weeks shall be paid at 2/3 the employee’s regular rate, for their usual hours scheduled, up to a maximum of $200/day or $10,000 total per employee.  (This rule/amount is specifically for the employee at home caring for a school age child.  The calculation is different for a staff member who is sick with COVID-19, etc.)

* An example.  Your staff member earns $39K per year and generally works 2000 hours.  That makes their daily rate $156.  2/3 of that is $104.  You must then pay them $104/day or $520/week for up to 10 weeks, for a possible total of $5,200 for this employee assuming they are out an entire 12 week period for the same COVID-19 lack-of-childcare reason.

* An example.  Your staff member makes $15/hour and generally works 40 hours per week.  That makes their daily rate $120.  2/3 of that is $80.  You must pay them $80/day or $400/week for up to 10 weeks, for a possible total of $4,000 for this employee assuming they are out an entire 12 week period for the same COVID-19 lack-of-childcare reason

HOW YOU WILL BE REIMBURSED. 
Yes, you get this money back.  Unfortunately you have to pay it out in advance, which is where your lines of credit become essential, but you do get reimbursed.  The reimbursement process has not been clarified but here is the latest.

* You will receive a tax credit reimbursement against your payroll taxes.  To the extent the credit exceeds the amount of taxes paid, you will receive a refund.

* You can begin skipping your current payroll tax deposits as an immediate way to use the coming credit.

* There will be a way to seek an expedited advance from the IRS by submitting a claim form. 

POSSIBLE EXCLUSIONS FROM THE PROVISIONS. 
* There is a potential exception for “healthcare providers” meaning they would not be covered under this act and the leave would not have to be provided.  Though this point is still up for debate, we do not believe your nonprofessional staff would be considered a healthcare provider for this purpose, and so they would be covered—meaning you would be required to provide the leave.  If you employ associate dentists, they might qualify for the exclusion but that has not been determined.

* There is an exclusion for businesses with fewer than 50 employees whose viability would be effected as a result of providing the required sick leave.  There has been no process yet given regarding how to obtain the waiver or what the exact qualifications will be.

TAKE AWAYS.
* If you have the cash reserves or LOCs in place to temporarily absorb the leave requirements, you are likely subject to its provisions.

* This is a way, if a viable option for you, to care for any staff that qualify.  And remember—you will get it back.  Your employees will appreciate your loyalty and you will be able to retain your already-trained and, therefore, valuable staff who will be eager to return and put in the extra hours that will be required to work in all these cancelled patients.  Please remember that although this is a very painful time, it is expected to be of a fixed duration.  Some decisions need to be made with a longer term vision in mind.

* This does not mean you have to pay every employee you send home because of lack of work.  Those who do not have a child at home do not qualify and so their recourse would be unemployment.  But if you do have staff that qualify, and your practice is healthy enough to comply with the law, the pay your employee would receive under this provision would likely be more than that under unemployment; plus you get it back.  So it’s a win-win.

* There is more legislation in the works that will likely be passed sometime this week that may offer some serious payroll relief.  If you can support your employees until then, this may all be a moot point, since you may be in for some much needed substantive relief.

Don’t forget…this is all murky and our advice could change based on new understanding, new information or new laws.  But we want to keep you as informed as we can and provide you the support you need to navigate these tumultuous times.

Here are the current Covid-19 practice operations survey results.
https://www.surveymonkey.com/results/SM-CLB58VJM7