Borrowers, especially small businesses, who received Paycheck Protection Program (PPP) loans under the Coronavirus Aid, Relief, and Economic Security Act (CARES) may be ready to apply for forgiveness, but according to the American Institute of Certified Public Accountants (AICPA), final program guidance is not available from the SBA and U.S. Treasury Department.

Factors Affecting the Forgiveness Application Process

• Lenders are not ready to process forgiveness applications. Many are developing technology tools such as “forgiveness portals” or implementing other options for a more efficient process. But until the U.S. Small Business Administration (SBA) and the U.S. Treasury Department issue final guidance, those technology tools can’t be finalized. Bank of America, for example, is telling PPP loan holders it expects to begin opening its online loan forgiveness application process in early August.
• Organizations have 24 weeks to use their PPP money, which allows for more time to take steps that will help them qualify for full loan forgiveness. Borrowers who received their loans before June 5, 2020, can choose either eight weeks or 24 weeks for their covered period. That increased flexibility in the time to use PPP funds can be important in maximizing loan forgiveness.
• Payroll costs are a significant component of PPP forgiveness. Many payroll providers are developing custom reports to comply with PPP guidance. However, like lenders, they are waiting on final SBA and Treasury guidance so they can prepare the PPP-compliant reports needed.
• Borrowers aren’t required to make any loan payments before they apply for forgiveness or until 10 months after their covered loan period ends. Since payments aren’t due yet, there is less urgency to apply for forgiveness.
• Applying for forgiveness may be easier than expected. Borrowers can use a simplified process through the SBA Form 3508EZ if they meet at least one of these requirements:
  • They are self-employed individuals, independent contractors or sole proprietors who had no employees when they applied for their PPP loan and who didn’t include any employee salaries in calculating their average payroll amount in their application.
  • They didn’t reduce salaries or hourly wages for certain employees by more than 25% during the loan period and — except for specified exceptions — didn’t reduce the number of employees or the average paid hours for employees between January 1, 2020, and the end of their covered loan period.
  • They didn’t reduce salaries or hourly wages for certain employees by more than 25% during the loan period and were unable to operate at the same business activity level during the loan period because of federal safety requirements or guidance related to the pandemic. CPAs expect SBA guidance to help determine how broadly this safe harbor can be used.

To prepare for the forgiveness application process, borrowers can:

• Take steps to document how the loan proceeds were used.
• Gather documentation needed to support non-payroll costs for expenses such as mortgage interest, rent or lease payments, and utilities, including account statements and other proof of payments.

Lenders may not request supporting documentation for all disbursements as part of the forgiveness application; however, increased scrutiny is guaranteed for loans of $2,000,000 or more.

To learn more, check out AICPA’s PPP resources. Contact your CPA for assistance with the PPP loan forgiveness process.

 

Questions?
Contact your Claremont team at 800.696.4543 or info@claremontcompanies.com.

 

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Paylocity COVID-19 On-Demand Webinars

Posted July 20, 2020 by Lori Berson

To help brokers and their small business clients get back to work safely and successfully, Claremont’s partner Paylocity has created a series of COVID-19 on-demand webinars (approximately one hour each).

COVID-19 On-Demand Webinars

Getting Back to Work
As restrictions start to lift, now is the time for employers to think about how to bring employees back to work and back to the office. That said, there’s a lot to consider, plan, and communicate. Find out what employers need to know to develop a plan, stay compliant, and keep employees safe.

Life After COVID: The New Normal
As a result of COVID-19, some changes may be temporary, but many of them have already come to define our new “normal.” Paylocity’s HR experts discuss employee expectations during and after the pandemic, what the new employee experience has become, and the role resiliency and empathy play going forward.

How to Successfully Re-engage with Employees and Clients
Learn strategies for engaging clients and employees safely and effectively as they return to work, best practices to strategically navigate and implement new guidelines, how to apply new policies and procedures around telecommuting and other related employee rights due to the current health crisis, and how small businesses can implement procedural improvements.

For Partners: Emerging Stronger Together —Successfully Navigating Crisis
Members of the partner community, including benefits brokers, financial advisors, consultants, associations, and more, will learn strategies to help navigate the current crisis and emerge stronger with more resiliency and brand equity.

Getting Through Emergencies, Disasters, Communicable Diseases
See how to support organizations and employees through COVID-19 and beyond. Hear about preparing for emergencies, disasters, and pandemics; implementing preventive measures; managing employees during a crisis; and catastrophic event business recovery.

To learn more, contact us today!

Questions?
Contact your Claremont team at 800.696.4543 or info@claremontcompanies.com.

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Get The Latest News with Text Messaging!

Your success is important to us, and we’re actively working on new solutions to support you throughout the year. To get the latest news via text messaging in the future, simply provide your cell phone number here.

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Blue Shield Premium Payment Program Extended to July

Posted July 7, 2020 by Lori Berson

Blue Shield of California is continuing its Premium Plan Program for the month of July. This program provides a flexible premium payment plan option for employers whose April, May, June and/or July 2020 premium payment is delinquent. Get the details.

Get The Details

 

Questions?
Contact your Claremont team at 800.696.4543 or info@claremontcompanies.com.

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Get The Latest News with Text Messaging!

Your success is important to us, and we’re actively working on new solutions to support you throughout the year. To get the latest news via text messaging in the future, simply provide your cell phone number here.

Sign Up for Text Messaging

 

 

CARES Act HSA, FSA, and HRA Changes

Posted July 7, 2020 by Lori Berson

Help your clients and their employees understand the CARES Act changes to Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs) with this recap from Sterling Administration.

CARES Act and HSAs

What is the HSA Contribution Deadline?
The IRS has confirmed that account holders can make contributions to HSAs for the 2019 plan year up to the new filing deadline of July 15, 2020. The IRS states that contributions to an HSA may be made at any time during the year or by the due date for filing that year’s tax returns. This rule applies to the new federal income tax filing deadline for 2020, which the IRS extended in response to the COVID-19 crisis.

Does my HSA Cover COVID-19 Testing and Treatment?
The IRS (Notice 2020-15 on March 11, 2020) allows high-deductible health plans (HDHPs) to cover testing and treatment for COVID-19 without a deductible. Coronavirus testing and treatment are considered qualified medical expenses under an HDHP, and people can use HSA funds to pay for it. Due to the COVID-19 national health emergency, Notice 2020-15 also applies to HDHPs that would otherwise be disqualified under Internal Revenue Code section 223(c)(2)(A). In other words, HDHPs that provide additional health benefits covering Coronavirus testing and treatment, and HDHPs with a deductible that falls below the minimum requirement are also subject to the Notice.

Does the CARES Act Expand the List of Reimbursable Expenses through an HSA? (Over-the-Counter (OTC) Drugs and Menstrual Care Products)
Yes. The CARES Act states that consumers can purchase OTC drugs and medicines (including menstrual products) with funds from an HSA, FSA, or HRA. Consumers may also receive reimbursement for OTC purchases through those accounts. This provision is effective for purchases and reimbursements of expenses incurred after December 31, 2019. No expiration date.

• Merchants were expected to start adopting changes for OTC items around April 15 and menstrual care products around May 15. However, merchants may take up to a month to complete the changes that will allow consumers to purchase these items with a card swipe.
• If consumers try to purchase these items with their benefits card before systems have been updated and the transaction is denied, they can submit a claim for reimbursement.

What Has Changed Regarding Telehealth?
The CARES Act states that “telehealth and other remote care services” below the deductible will be permitted in an HSA-compatible HDHP. This provision is effective immediately and will expire on December 31, 2021.

CARES Act and FSAs

Does the CARES Act Expand the List of Reimbursable Expenses through an FSA? (Over-the-Counter (OTC) Drugs and Menstrual Care Products)
Yes. The CARES Act states that consumers can purchase OTC drugs and medicines (including menstrual products) with funds from their HSA, FSA, or HRA. Consumers may also receive reimbursement for OTC purchases through those accounts. This provision is effective for purchases and reimbursements of expenses incurred after December 31, 2019. No expiration date.

• Merchants were expected to begin adopting changes for OTC items around April 15 and menstrual care products around May 15. However, merchants may take up to a month to complete the changes that will allow consumers to purchase these items with a card swipe.
• If consumers try to purchase these items with their benefits card before merchants have updated their systems and reject the transaction, they can submit a claim for reimbursement

Can Dependent Care FSA Participants Who Have Lost Preschool and Childcare Services Due to Facility Closures Reduce Their DCA Elections or Terminate Altogether?
Yes. Participants can reduce or terminate their dependent care account elections under these circumstances, as their childcare needs have changed. However, account holders are advised to keep in mind that they may not need to change or revoke their plan elections, even if they are not incurring any new dependent care expenses. Account-holders may be able to claim their full plan year elections once the shelter-in-place orders cease, as childcare expenses can often reach the $5,000 annual contribution limit within 2-5 months.

CARES Act and HRAs

Does the CARES Act Expand the List of Reimbursable Expenses Through an HRA? (Over-the-Counter (OTC) Drugs and Menstrual Care Products)
Maybe. It depends on how the employer’s specific HRA is set up. Reimbursable expense rules under an HRA plan vary from employer to employer, so your HRA plan documents will need to be reviewed.

The CARES Act states that consumers can purchase OTC drugs and medicines (including menstrual products) with funds from their HSA, FSA, or HRA. Consumers may also receive reimbursement for OTC purchases through those accounts. This provision is effective for purchases and reimbursements of expenses incurred after December 31, 2019. No expiration date.

• Merchants were expected to begin adopting changes for OTC items around April 15 and menstrual care products around May 15. However, merchants may take up to a month to complete the changes that will allow consumers to purchase these items with a card swipe.
• If consumers try to purchase these items with their benefits card before systems have been updated and the transaction is denied, they can submit a claim for reimbursement.

FSA and HSA Store Eligible Items

Take the guesswork out of what is eligible with your FSA and HSA plans with Sterling Administration’s partner – the HSA Store and FSA Store. It’s an easy-to-use online shopping platform that offers 24/7 chat and online help.

• FSA eligible items.
• HSA eligible items.

Use these valuable coupons when shopping.

 

Questions?
Contact your Claremont team at 800.696.4543 or info@claremontcompanies.com.