Strengthen the Financial Health of Your Business
Nearly half of home health businesses reported an increase in patient cancellations or refusal of services due to fears of COVID-19 transmission. For patients who still required care, there was a 30 decrease in available staff.
The home health industry has not been exempted from higher costs, spending more on virtual care technology and personal protective equipment (PPE) to ensure the safety of both patients and employees. One way these businesses can recoup revenue lost during the pandemic is through the Employee Retention Credit (ERC).
A payroll tax credit introduced through the Coronavirus Aid, Relief and Economic Security Act (CARES Act), the United States government enacted the ERC to encourage businesses to keep their employees on the payroll during the pandemic. How much eligible home health employers receive through the Employee Retention Credit depends on the calendar quarters they claim it.
For 2020, the ERC is a credit against certain payroll taxes of 50 percent of the wages paid — up to $10k per employee — from March 12 – December 31, 2020 (capped at $5k per employee). For 2021, the ERC is a quarterly tax credit of 70 percent of the first $10,000 in wages per employee in each quarter of 2021 from January to September 2021 (capped at $7K per employee per quarter).
Example: Minnesota, April 9, 2020 – Governor Walz signed Emergency Executive Order 20-22, which extends the previous stay at home Order and reaffirms the temporary closure of bars, restaurants, and other places of public accommodation. Minnesota residents are ordered to stay at home or in their place of residence except to engage in Critical Activities and Critical Work Sectors. Critical sectors include healthcare, food and agriculture, energy, transportation, public works, and communications, among others. The Order is now in effect until May 3, 2020.
Find More Government Orders Specific to Your State on Our Insights Page
This comprehensive list of FAQs offers answers to common questions about the Employee Retention Credit:
How Might the ERC Benefit My Home Health Business?
For How Long Is the Employee Retention Credit Available?
How Do I Know if My Home Health Business is Eligible for the ERC?
There are two main ways to be eligible for stimulus refunds:
- If your business matches the required decline in revenue within any quarter of 2020 or 2021.
- If you have W-2 employees.
What Exactly Is “a Significant Decline in Gross Receipts” Under the Employee Retention Credit Program?
How Do I Apply for the Employee Retention Credit?
Qualifying orders (From IRS)
What kind of government orders qualify my business or organization for the ERC? (added July 28, 2023)
Examples of governmental orders:
- An order from the city’s mayor stating that all non-essential businesses must close for a specified time period;
- A state’s emergency proclamation that residents must shelter in place for a specified period, except for essential workers;
- An order from a local official imposing a curfew on residents that impacts the operating hours of your trade or business for a specified time period;
- An order from a local health department mandating a workplace closure for cleaning and disinfecting.
Can I rely on a recommendation, bulletin or statement issued by a government authority to qualify for ERC? (added July 28, 2023)
Recommendations or statements encouraging you to take certain actions are not orders.
If you use a third party to calculate or claim your ERC, you should ask them to give you a copy of the government orders – not a generic narrative about an order. Read the order carefully and make sure it applied to your business or organization.
Is being subject to a government order enough to make me eligible for ERC? (added July 28, 2023)
What does it mean to be fully or partially suspended? (added July 28, 2023)
Some examples of who doesn’t qualify under this eligibility factor:
- If all your employees were able to telework during the pandemic and your business continued to operate, your business wasn’t suspended.
- If your customers were affected by a stay-at-home order, but no orders applied to your business operations, you weren’t suspended.
- If you voluntarily closed your business or reduced hours of operation, you weren’t ordered to suspend.
You could still qualify for ERC based on a decline in gross receipts even if you don’t qualify under suspension of operations due to government order.
Was my business or organization fully or partially suspended if I had a supply chain issue? (added July 28, 2023)
The IRS provided a narrow, limited exception if an employer was not fully or partially suspended but their supplier was. However, it applied only when the employer absolutely could not operate without the supplier’s product and the supplier was fully or partially suspended themselves.
In addition to having the supplier’s governmental order, you will need to show that:
- The government order caused the supplier to suspend operations,
- You couldn’t obtain the supplier’s goods or materials elsewhere (regardless of cost), and
- It caused a full or partial suspension of your business operations.
Client Case Study
Small, family-owned businesses were strongly impacted by the pandemic and the accompanying government-mandated shutdowns. A Pennsylvania-based automotive service provider struggled as these shutdowns made it more difficult to keep their...Read More
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