ERTC Medical Practices
If you own a medical practice that has between 5 and 500 employees, you more than likely qualify for the employee retention credit (ERC). To get the ERTC, your medical practice must have either:
1. Closed its doors partially or fully
2. Lost 20% of gross receipts in any quarter of 2020 or 2021 (compared to the previous year's quarter)
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Employee Retention Credit for Medical Practices
Physician practices and other healthcare businesses are eligible for the Employee Retention Credit. This is a refundable tax credit that reimburses employers for their employment taxes. It is available to medical, dental, and hospital-affiliated organizations. A large number of these businesses have received refunds that have resulted in millions of dollars in cash benefits.
The Employee Retention Tax Credit has been a valuable incentive for businesses to retain employees during the Covid-19 pandemic. In the aftermath of the disease, several medical groups experienced financial challenges. Many of these practices experienced substantial cuts in staff and patient volume, and some had to permanently lay off some employees.
Fortunately, many healthcare providers were able to obtain monetary relief through various stimulus packages. These include advanced payments from Medicare and the Paycheck Protection Program loan provider relief funding. Although these measures did not fully prevent the spread of the disease, they did help a large number of providers to keep their operations afloat. However, some physicians and other healthcare businesses still struggle in this challenging time. If your practice has been impacted by the COVID-19 epidemic, it is important that you understand how to qualify for ERC.
Physician practices and other healthcare businesses may qualify for the Employee Retention Credit by submitting a request to the IRS. They must meet certain requirements, such as a significant decline in gross receipts, during the 2020 or 2021 tax year. For 2020, an employer will receive up to $5,000 for each full-time employee, or 50% of the total wages paid, if the gross receipts are less than half of what they were during the same time period in the previous tax year.
For 2021, an employer will receive up to $700 for each full-time employee, or 70% of the total wages paid, if the reduction in gross receipts is at least 20%. To be eligible, an employer must have at least 500 full-time employees at the end of the calendar year. Qualified sick leave wages, wages paid to qualified family leave workers, and qualified health plan expenses are excluded from the credit.
Physician practices and other healthcare businesses that are affected by the pandemic and receive an executive order from their state government to suspend operations are eligible for the ERC. This includes many hospitals and physical therapy centers, which experienced a tremendous decrease in patient volumes during the pandemic.
There are other ways that a medical practice can obtain monetary relief through the IRS. One of these is by filing a claim for the refundable employee payroll tax credit. Since the government is now allowing more providers to take advantage of this credit, it is important that you take the necessary steps to ensure that your practice is eligible. Contact a certified public accountant, like Cherry Bekaert, to learn more about the Employee Retention Credit and how it can benefit your practice.
Expansion through CAA
The CAA included a number of eminently useful provisions, including a SEP (Special Enrollment Period) for Medicare beneficiaries. This SEP was conceived to help ease the transition from Medicaid to Medicare for a number of reasons, from the challenge of navigating various state processes for redeterminations to removing the incentive for individuals to delay enrollment in Medicare. In particular, the SEP is intended to remove the penalties associated with late enrollment in Medicare and to provide a new enrollment opportunity for individuals with exceptional conditions. However, this is only a partial solution.
Although the SEP is an excellent initiative, there are many other equally important options that should be explored. For instance, the SEP may not be necessary to fully implement the benefits of the ACA. As such, CMS should consider additional SEPs to better support individuals with medical needs. They should also continue to work with SSA to ensure a transparent equitable relief process is in place.
Several commenters suggested expanding the SEP to include more individuals and groups. This would involve setting up a formal regulatory structure for the SEP. Others recommended a more granular approach that would apply to a specific population. Finally, multiple commenters proposed a lower-fidelity version of the SEP. These commenters described various pitfalls in the current enrollment process. Some suggested a separate SEP for immigrants who have surpassed the five-year residency requirement.
While the SEP has been praised as an important innovation in the ACA, a number of commenters have questioned the efficacy of the program. One commenter detailed a scenario in which she missed an IEP and remained in adult group coverage for the duration of PHE. Similarly, a commenter questioned whether the SEP is applicable to individuals who missed the PHE in the first place. He suggested the SEP isn't the only way to solve this issue, and he asked for clarifications on the parameters of the SEP.
Rather than simply implementing a more fanciful SEP, the CMS should consider using data and data resources already in place to inform its decisions. It should also ensure that the requirements for the SEP are similar across all four Parts of Medicare. In particular, the SEP should be available to a larger and more diverse group of beneficiaries.
In the event that a significant percentage of the nation's Medicare beneficiaries are eligible for the SEP, CMS should make it a priority to educate them on its benefits. Similarly, the SEP should not be used as a cyclical re-enrollment procedure. There is a need to consider the SEP as a way to eliminate barriers to enrollment and make a case for setting up a more standardized regulation.
In addition to the SEP, CMS should investigate ways to help American Indians access the healthcare they need. For instance, it may be appropriate to waive the LEP to qualified Native Americans. Other financial support mechanisms include MSPs, premium payment plans, and State buy-ins.
Claiming ERC against Medicare taxes instead of Social Security taxes
Employee Retention Credit (ERC) is a tax credit for employees that allows for tax deductibility for wages paid during a non-service period. There are several different conditions under which the ERC can be claimed. Among the most common are businesses that have had a revenue decline. In order to take advantage of this credit, the business must be eligible. Specifically, a business is qualified if it has a total gross receipts decline of at least 90%. However, in practice, the best way to determine whether or not you are eligible is to ask your accountant or professional advisor.
The ERC is not the only program available to assist in retaining your employees. Employers may also claim the FICA tip credit, which counts tips as qualified wages. However, in order to be able to take advantage of these programs, you must have enough qualified wages to make the claim. It is important to note that the ERC is not available to spouses and part-time employees.
The Employee Retention Credit is a complex program. This is why it is a good idea to seek advice from a professional. An ERC specialist can help your business maximize its eligibility and claim. Although the ERC is a complicated program, the reward can be well worth the effort. A small business with fewer than 500 full-time equivalents (FTEs) could potentially claim the ERC for its entire first quarter of 2021. For larger companies, however, the ERC is limited to wages paid during non-service periods.
One of the more interesting changes introduced by the Rescue Act is the expansion of the statute of limitations for assessing the ERC. While the statute of limitations was originally three years, the Rescue Act expanded it to five years. That means that businesses can claim the ERC until 2024, and may have to file amended returns for the next couple of years. Furthermore, the IRS may be slow to process your amended returns, which can create a quandary for you. To avoid this, you should check with your payroll provider before filing your Form 941.
The most obvious way to take advantage of the ERC is to retain your employees. Luckily, the IRS has a program that can make it easier to do just that. The Employee Retention Tax Credit can be claimed in both fiscal and calendar years. Depending on your business, you may be able to claim the credit for up to $26,000 per employee. Additionally, the credit can be claimed retroactively for up to two years after the end of the reference period.
If you are planning to take advantage of the Employee Retention Tax Credit in the coming year, you should review your payroll and tax deductions to make sure you are claiming all of your eligible expenses. By taking the time to do so, you can claim the credit as quickly and efficiently as possible.