What to know and various application deadlines and extensions for the latest stimulus bill
In January a new year arrived along with a new stimulus and relief bill. The new stimulus bill, the second stimulus bill, the last stimulus bill — whatever you want to call it, it has far-reaching effects that may benefit a chiropractic practice … with one big exception.
The new stimulus bill does not offer liability protection or protection from HIPAA fines or audits. While the stimulus bill may offer assistance in many ways, it does not provide liability protection.
This means many risks remain if you are seeing patients during the crisis, and documented action will be needed to protect your practice. It is critical you have a documented crisis compliance and HIPAA program in place.
The crisis compliance program
In the event someone contracts COVID-19 in your office you could be open to a lawsuit. You have to defend yourself and, in a lawsuit, he who has the best documentation typically wins.
There may ultimately be legislation to mitigate such risk, but even then, it may only be for those who were “not negligent.”
Since there are no hard-and-fast rules as to what constitutes compliance, you have to focus your program upon showing that you are “not negligent” and are paying attention to crisis guidelines and documenting good faith efforts to comply with lockdowns, mask requirements, sanitation and screening requirements, etc.
To show you have complied with these guidelines takes a program that is well-documented. This is best served by having an audit tool that is continuously updated, showing what you have done (to sanitize, protect staff and patients, etc.), when you started performing each measure, when you stopped and your rationale for doing so. “I didn’t feel like doing it,” or “my staff didn’t like it,” or “my patients did not want to comply,” or “I am politically against it,” etc., does not make for a reasonable rationale.
Good news on the HIPAA front
As of Jan. 5, 2021, there is a new law that may help protect chiropractors. The topic of HIPAA is vast, but for now one update is critical.
A new bill, modifying the HITECH act, was signed into law on Jan. 5, 2021. This law outlines what is close to a “safe harbor” for doctors who are regulated under HIPAA. President Trump signed into law HR7898 to specifically provide incentives for covered HIPAA entities (nearly every chiropractor) and business associates to put cybersecurity safeguard programs in place, as required under the HIPAA law.
This modification of the HITECH law will provide much- needed protections for covered entities as it gives HHS and OCR the opportunity to reduce or eliminate fines and/or reduce or eliminate audits against a covered entity that has been breached or is being audited — if they can document 12 months of adherence to known cybersecurity policies and procedures.
This is a huge incentive for doctors to get the right HIPAA program in place — get with your compliance expert to make a plan.
More good news and PPP
NOTE: There are financial and legal risks, and rules change continuously, so it is highly recommended you consult the proper legal, financial and compliance experts.
The Consolidated Appropriations Act of 2021 (“CAA” or the “ACT”) was signed into law on Dec. 27, 2020, containing more than 5,500 pages. For chiropractors it concerns:
- New PPP loans
- Changes in tax impact of government monies
- Changes in Economic Injury Disaster Loan (EIDL) forgiveness
- Changes in once-prohibited grant forgiveness
- Medicare benefits
Approximately $284 billion was appropriated for a new PPP loan program, giving eligible borrowers an opportunity to receive a second round of funding.
To qualify for a second PPP loan you must be a schedule C taxpayer, LLC, S corporation or partnership with no more than 300 employees. You must have suffered a 25% gross receipts reduction in any quarter in 2020 as compared to the same quarter in 2019 (receipt of a PPP loan does NOT add your loan amount to your gross receipts), and you must have used all proceeds from the first PPP loan toward approved expenses by the time you receive the second loan.
You cannot apply for the second loan if you have declared bankruptcy, and you have until March 31, 2021, to apply.
This funding is also for those who, due to confusion, received less than the proper amount and/or who returned or did not accept their original PPP1 loan.
Amount and tax consequences
As with the first round of PPP, the second PPP amount will be determined based on your payroll average at the time of applying, and the forgiveness amount will be determined by your employee retention. Other rules apply and your banker or CPA should be able to help you calculate the appropriate amount.
The Internal Revenue Service took the stand that any “free” (forgiven) PPP government money that is used to pay for “allowed expenses” cannot be used for normal business expenses at tax time. They viewed this through the eyes of traditional “grant money language,” asserting it is “double dipping” to get free money and then use those items again to reduce your taxes.
That might be true during normal times, however, it would be pretty silly for the government to go to the expense and trouble to assure you get money only to take it away at tax time — what would be the point?
Example: You obtain a “forgiven” PPP loan. You spend $5,000 on rent. Then at tax time you are not allowed to reflect that rent as a deduction, therefore $5,000 of your gross income has no offsetting deduction and, depending on your tax rate, that may cause you to have to pay an extra $1500, plus or minus, in taxes.
But great news: This new law states that you can obtain the free money and use the expenses at tax time.
Stimulus bill: Are SBA EIDL emergency funds ‘free money?’
Many people were confused during the rollout of the first stimulus bill when they were told to check the SBA site for PPP details. Upon arriving at the website they saw there was a disaster loan (EIDL) available for emergency relief and thought it was the PPP loan.
Many doctors applied and received $1,000 per employee, up to $10,000, for emergency relief and then were instructed to take out an additional loan that had to be repaid with interest. They were informed that the up-front emergency money would be forgiven, but the larger loan was to be repaid. They later realized this was not the PPP loan.
They then applied for and received the PPP loan, only to be told that the EIDL loan would no longer be forgiven since they also had a PPP loan.
The new stimulus bill changed all of this.
The front-end EIDL is now forgiven, even if you have a forgiven PPP loan and the items paid with the loans are also tax-deductible. They also repealed the requirement that borrowers of PPP loans reduce their loan forgiveness by the amount of the EIDL advance and stated that Congress has instructed that all borrowers of PPP loans previously affected by this will be “made whole.” Procedures to do so are not clear, but money will be refunded. The U.S. government appropriated $20 billion for targeted EIDL advances for small businesses in low-income communities that have suffered greater than 30% economic loss. This gives an opportunity to receive a full $10,000 grant, no matter your number of employees. These EIDLs are available through Dec. 31, 2021.
Medicare and other updates
Medicare put into effect a temporary pay raise of 3.7% for those who treat Medicare patients. There is also an additional $3 billion earmarked for health care providers, but no details as to distribution yet.
There are new benefits for chiropractors that will definitely require the assistance of a CPA or banker. There are benefits in regard to extra deductions you might be able to take if your business was severely impacted by the pandemic and/or if you were paying employees sick leave due to COVID-19 or had to care for family members who were infected. Originally these benefits were not available to you if you also had a PPP loan, but that was eliminated under the new stimulus, so you might be eligible.
In addition, Deferral of Employee Payroll Taxes was extended to Dec. 31, 2021, and the Section 7(a) Debt Relief Program, designed to pay six months of SBA loan payments, was extended by three additional months.
This is a massive stimulus bill with many more details. At the time of this writing it looks as though there will be even more stimulus on the way — stay plugged in.
TY TALCOTT, DC, is a certified HIPAA Privacy and Security Expert (CHPSE) and president of HIPAA Compliance Services. He has consulted for thousands of health care practices relative to business development and protection. He can be contacted at 469-371-8804 or at DrTyTheComplianceGuy.com.