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HSC CORONAVIRUS
C
OMMUNICATION
April 10, 2020
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HSC COVID-19 Fast Response Team
We are here to help!
In these uncertain times with multimedia channels reporting conflicting and sometimes incorrect information, our firm is working to add clarity to this situation by providing new and verified information as it becomes available to us. We have also set up a Coronavirus Resource Center on our website for ongoing information.
In addition, we have created the HSC COVID-19 Fast Response Team to serve our clients in addressing the difficult decisions they are being faced with on a daily basis. This dedicated multi-disciplinary team consists of our tax, payroll, HR, capital markets and accounting professionals.
If you have questions or would like to speak with this team please contact your HSC team member or Kyle Wininger, CPA, CICA, CVA, CFE at [email protected].
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Main Street Lending Program
The Federal Reserve made history on Thursday by moving aggressively to provide up to $2.3 trillion in liquidity commitments to support the economy. This policy intends to bolster households, small and medium-sized firms, and the ability of state and local governments to float debt to ensure critical services during the pandemic.
Like the Paycheck Protection Program, we anticipate that the Main Street program will experience greater-than-expected demand and will very likely be oversubscribed. Eligibility is based on firms with revenues of less than $2.5 billion in 2019, or firms with up to 10,000 employees. Each firm must be a business that is created or organized in the United States with significant operations and a majority of its employees in the U.S.
Loan terms are a four-year maturity at an adjustable rate of SOFR plus 250-400 basis points with the minimum size of $1 million. Amortization of principal and interest will be deferred for one year. The maximum size will be the lesser of $25 million or an amount that, when added to the borrower's existing and committed but undrawn debt, does not exceed four times the borrower's 2019 EBITDA. Prepayment will be permitted without penalty.
The facility does contain some loose conditionality around efforts to maintain payroll and retain its employees during the term of the loan, as well as not cancel or reduce any existing lines of credit to the eligible lender or any other lender. In addition, loans obtained through the facility will not be used to repay or refinance pre-existing loan balances.
Here's a picture of how it is intended to work
For additional information about the Main Street Lending Progrom, refer to the RSM article, Fed introduces Main Street Lending Program.
Please contact your HSC advisor, or Scott Touro, MBA at [email protected] with any questions you may have. |
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IRS Extends More Tax Deadlines
Individual, Trusts, Estates, Corporations, and Others
Yesterday's notice expands this relief to additional returns, tax payments and other actions. As a result, the extensions generally now apply to all taxpayers that have a filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020. Individuals, trusts, estates, corporations and other non-corporate tax filers qualify for the extra time. This means that anyone, including Americans who live and work abroad, can now wait until July 15 to file their 2019 federal income tax return and pay any tax due.
Estimated Tax Payments
Besides t
he April 15 estimated tax payment previously extended, today's notice also extends relief to estimated tax payments due June 15, 2020. This means that any individual or corporation that has a quarterly estimated tax payment due on or after April 1, 2020, and before July 15, 2020, can wait until July 15 to make that payment, without penalty.
Please contact John Rittichier, CPA at
[email protected]
or Mike Vogel, CPA at
[email protected]
with any questions
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Filing and Payment Deadlines Questions and Answers
In
Notice 2020-18 (PDF)
, the Treasury Department and the Internal Revenue Service (IRS) announced special Federal income tax return filing and payment relief in response to the ongoing Coronavirus Disease 2019 (COVID-19) emergency. Attached are answers to frequently asked questions related to the relief provided in the Notice. These questions and answers will be updated periodically and are designed to be a flexible tool to communicate information to taxpayers and tax professionals in this changing environment. The answers to these questions provide responses to general inquiries and are not citable as legal authority. Accordingly, the Treasury Department and the IRS are continuing to consider additional IRB guidance on these issues addressed in these FAQs.
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FASB to Defer ASC 606 for Private Franchisors and ASC 842 for Certain Entities
At its meeting on April 8, 2020, the Financial Accounting Standards Board (FASB) decided to propose the following effective date deferrals due to the coronavirus pandemic:
- Proposal to defer the effective date of Topic 606, Revenue from Contracts with Customers, of the FASB's Accounting Standards Codification (ASC) by one year for franchisors that are not public business entities (as defined in the Master Glossary of the ASC).
- Proposal to defer the effective date of ASC 842, Leases, for all of the following entities by one year: (a) private companies, (b) not-for-profit entities that have issued, or are conduit bond obligors for, securities that are traded, listed or quoted on an exchange or an over-the-counter market (i.e., public not-for-profit entities) that have not yet issued financial statements and (c) private not-for-profit entities (i.e., not-for-profit entities other than those considered public).
For additional information about these deferrals to be proposed by the FASB, refer to the RSM our article, FASB to provide limited deferrals for ASC 606 and ASC 842.
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HHS to Begin Immediate Delivery of Initial $30 Billion of CARES Act Provider Relief Funding
Today, the Department of Health and Human Services (HHS) is beginning the delivery of the initial $30 billion in relief funding to providers in support of the national response to COVID-19 as part of the distribution of the $100 billion provider relief fund provided for in the Coronavirus Aid, Relief, and Economic Security (CARES) Act recently passed by Congress and signed by President Trump.
The $100 billion of funding will be used to sup
port healthcare-related expenses or lost revenue attributable to coronavirus and to ensure uninsured Americans can get the testing and treatment they need without rece
iving a surprise bill from a provider. The initial $30 billion in immediate relief
funds will begin being delivered to providers today.
Recognizing the importance of delivering the provider relief funds in a fast, fair, and transparent manner, this initial broad-based distribution of the relief funds will go to hospitals and providers across the United States that are enrolled in Medicare. Facilities and providers are allotted a portion of the $30 billion based on their share of 2019 Medicare fee-for-service (FFS) reimbursements. These are payments, not loans, to healthcare providers, and will not need to be repaid.
HHS and the Administration are working rapidly on additional targeted distributions to providers that will focus on providers in areas particularly impacted by the COVID-19 outbreak, rural providers, and providers of services with lower shares of Medicare FFS reimbursement or who predominantly serve the Medicaid population. This supplemental funding will also be used to reimburse providers for COVID-19 care for uninsured Americans.
HHS is partnering with UnitedHealth Group (UHG) to deliver the initial $30 billion distribution to providers as quickly as possible. Providers will be paid via Automated Clearing House account information on file with UHG, UnitedHealthcare, or Optum Bank, or used for reimbursements from the Centers for Medicare & Medicaid Services (CMS). Providers who normally receive a paper check for reimbursement from CMS will receive a paper check in the mail for this payment as well, within the next few weeks.
Within 30 days of receiving the payment, providers must sign an attestation confirming receipt of the funds and agreeing to the terms and conditions of payment. The portal for signing the attestation will be open the week of April 13, 2020 and will be linked from hhs.gov/providerrelief.
UnitedHealth Group will donate all fees for the administration of the CARES Act provider relief fund.
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CARES Act Provider Relief Fund
President Trump is providing support to healthcare providers fighting the COVID-19 pandemic. On March 27, 2020, the President signed the bipartisan CARES Act that provides $100 billion in relief funds to hospitals and other healthcare providers on the front lines of the coronavirus response. This funding will be used to support healthcare-related expenses or lost revenue attributable to COVID-19 and to ensure uninsured Americans can get testing and treatment for COVID-19.
Immediate infusion of $30 billion into healthcare system
Recognizing the importance of delivering funds in a fast and transparent manner, $30 billion is being distributed immediately - with payments arriving via direct deposit beginning April 10, 2020 - to eligible providers throughout the American healthcare system. These are payments, not loans, to healthcare providers, and will not need to be repaid.
Who is eligible for initial $30 billion?
- All facilities and providers that received Medicare fee-for-service (FFS) reimbursements in 2019 are eligible for this initial rapid distribution.
- Payments to practices that are part of larger medical groups will be sent to the group's central billing office.
- All relief payments are made to the billing organization according to its Taxpayer Identification Number (TIN).
- As a condition to receiving these funds, providers must agree not to seek collection of out-of-pocket payments from a COVID-19 patient that are greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network provider.
- This quick dispersal of funds will provide relief to both providers in areas heavily impacted by the COVID-19 pandemic and those providers who are struggling to keep their doors open due to healthy patients delaying care and cancelled elective services.
How are payment distributions determined?
- Providers will be distributed a portion of the initial $30 billion based on their share of total Medicare FFS reimbursements in 2019. Total FFS payments were approximately $484 billion in 2019.
- A provider can estimate their payment by dividing their 2019 Medicare FFS (not including Medicare Advantage) payments they received by $484,000,000,000, and multiply that ratio by $30,000,000,000. Providers can obtain their 2019 Medicare FFS billings from their organization's revenue management system.
- As an example: A community hospital billed Medicare FFS $121 million in 2019. To determine how much they would receive, use this equation:
- $121,000,000/$484,000,000,000 x $30,000,000,000 = $7,500,000
What to do if you are an eligible provider?
- HHS has partnered with UnitedHealth Group (UHG) to provide rapid payment to providers eligible for the distribution of the initial $30 billion in funds.
- Providers will be paid via Automated Clearing House account information on file with UHG or the Centers for Medicare & Medicaid Services (CMS).
- The automatic payments will come to providers via Optum Bank with "HHSPAYMENT" as the payment description.
- Providers who normally receive a paper check for reimbursement from CMS, will receive a paper check in the mail for this payment as well, within the next few weeks.
- Within 30 days of receiving the payment, providers must sign an attestation confirming receipt of the funds and agreeing to the terms and conditions of payment. The portal for signing the attestation will be open the week of April 13, 2020, and will be linked on this page.
- HHS' payment of this initial tranche of funds is conditioned on the healthcare provider's acceptance of the Terms and Conditions - PDF, which acceptance must occur within 30 days of receipt of payment. If a provider receives payment and does not wish to comply with these Terms and Conditions, the provider must do the following: contact HHS within 30 days of receipt of payment and then remit the full payment to HHS as instructed. Appropriate contact information will be provided soon.
Is this different than the CMS Accelerated and Advance Payment Program?
Yes. The CMS Accelerated and Advance Payment Program has delivered billions of dollars to healthcare providers to help ensure providers and suppliers have the resources needed to combat the pandemic. The CMS accelerated and advance payments are a loan that providers must pay back. Read more information from CMS.
How this applies to different types of providers?
All relief payments are being made to providers and according to their tax identification number (TIN). For example:
- Large Organizations and Health Systems: Large Organizations will receive relief payments for each of their billing TINs that bill Medicare. Each organization should look to the part of their organization that bills Medicare to identify details on Medicare payments for 2019 or to identify the accounts where they should expect relief payments.
- Employed Physicians: Employed physicians should not expect to receive an individual payment directly. The employer organization will receive the relief payment as the billing organization.
- Physicians in a Group Practice: Individual physicians and providers in a group practice are unlikely to receive individual payments directly, as the group practice will receive the relief fund payment as the billing organization. Providers should look to the part of their organization that bills Medicare to identify details on Medicare payments for 2019 or to identify the accounts where they should expect relief payments.
- Solo Practitioners: Solo practitioners who bill Medicare will receive a payment under the TIN used to bill Medicare.
Please contact Brenda Wallace, CPA, CMPE at [email protected] for more information.
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Keeping Other Members of Your Team Informed
If you would like other members of your team to begin receiving this communication, please forward to each individual and they can subscribe here or email Leslie Wight at [email protected] and she will add them to the communications.
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Disclaimer:
The information contained in this email is for general guidance on matters of interest only. The publication does not, and is not, intended to provide legal, tax or accounting advice.
Internal Revenue Service rules require us to inform you that this communication may be deemed a solicitation to provide tax services. This communication is being sent to individuals who have subscribed to receive it or who we believe would have an interest in the topics discussed.
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Harding, Shymanski & Company, P.S.C.
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