Paycheck Protection Program Deadline Is August 8: Applying, Loan Forgiveness, And The New PPP

Paycheck Protection Program Deadline Is August 8: Applying, Loan ...

Source: Forbes, by Bruce Brumberg

Small businesses still have until August 8 to apply for potentially forgivable loans via the Paycheck Protection Program (PPP), which was extended from its original June 30 deadline. While a second PPP is under consideration in the Continuing Small Business Recovery and Paycheck Protection Program Act, part of the HEALS Act in the Senate, it’s more restrictive and the available amounts are smaller. The law’s adoption is far from certain, but it does at least set the minimum provisions around the negotiations in Congress for a second PPP.

To find out what small-business owners and nonprofit executive directors need to consider before submitting a PPP application, and what relief program could be next to apply for, I sought insights from Greg Reibman. He’s the president of the Newton-Needham Regional Chamber in the suburbs west of Boston, and in that role he regularly fields questions from businesses about PPP loans.

1. What’s the attitude of local small companies to the PPP? Has it changed since the deadline was extended to August 8?

The PPP rollout was very frustrating. The rules were vague. We’re at almost 50 FAQs on the PPP from the US Small Business Administration (SBA). That gives an indication of how often the feds have had to update their guidance.

All that said, the PPP has been a lifesaver for many of our businesses through the spring and summer. We’re recommending that businesses or nonprofits that have not yet applied should strongly consider doing so before the August 8 deadline. If you follow the spending rules, your entire loan can be forgiven, meaning you don’t have to pay it back. But you do need to be sure you understand the requirements and stay on top of any changes.

And as of July 31, the SBA said it still has $130 billion left to lend. Most of the most recent applicants “are the smallest of the small,” according to one SBA official. So if you haven’t applied because you may not have thought your operation isn’t large enough, go for it!

2. The PPP has been extended before. Might it be extended beyond August 8?

There’s a saying here in New England, attributed to Mark Twain: “If you don’t like the weather, just wait a few minutes.” The same seems to apply to the PPP rules and deadlines. Given that there’s $130 billion left (any unallocated money would go back to the US Treasury), I suppose an extension is possible. But why risk it? Apply now.

However, since you asked, both the House Democrats and the Republican Senate have proposed a PPP extension through the end of 2020 and some revisions.

The House plan expands PPP eligibility to include all nonprofits and local news broadcast entities. It also expands forgivable expenses to include PPE and employee protection costs related to Covid-19.

The Senate plan expands forgivable expenses to include covered supplier costs, covered worker protection expenditures, certain operations expenditures, and group insurance costs that are part of payroll costs. It also expands PPP eligibility to include: Chambers of Commerce (we like that!), destination marketing organizations, quasi-government entities, and other 501(c)(6) organizations, with some caveats. [See a section-by-section summary of the Senate version.]

3. As it seems there will be a new PPP program soon, should a company still try to apply before August 8? Or is there is no rush?

First, your question assumes that our leaders in Washington DC will agree to something! I’m never that optimistic. But even if they do, some businesses may be eligible for both PPP 1 and PPP 2. So, while I hate to sound like a broken record, apply for PPP 1 now. Then hope PPP 2 comes along in case you need it as well.

What may be helpful, too, is that back in June the SBA revived its Lender Match online tool to help underserved and disadvantaged small businesses and nonprofits. In its news release, the SBA described the tool as a resource for “pandemic-affected small businesses who have not applied for or received an approved PPP loan to connect with lenders.”

And for those of you who’ve received a PPP 1 loan and are crossing your fingers hoping a second PPP round becomes available, know that under the US Senate’s just-released stimulus plan, not every business which received the first round would qualify for the second. Under the GOP plan, loans would be limited to small businesses with 300 employees or fewer (rather than 500 or fewer under PPP 1). Funds would also be set aside for businesses with 10 or fewer employees.

You’d have to demonstrate at least a 50% revenue decline in the first or second quarter of this year, compared to the same quarter last year. The original PPP has no requirement to show a specific revenue decline, although you need to make certain certifications, such as on business necessity for the forgivable loan.

4. What else appears to be the difference between the first PPP, with the application deadline of August 8, and the new one that may become law, assuming the Senate GOP version is the general outline of the next PPP?

As with the original PPP, your maximum loan size would equal 2.5 times average total monthly payroll costs. However, the loan is capped at $2 million. Businesses that received a PPP loan may not receive another PPP loan that aggregates to more than $10 million, the maximum under the original PPP.

Here’s the good part: Under PPP 2, businesses could use the funds to purchase protective equipment for employees and customers, including masks and sanitizers. They’d also be able to use their funds for updated ventilation. A one-page summary from the Senate explains more about the PPP Second Draw Loans and the PPP improvements in this potential new law.

5. The first PPP, with the August 8 deadline, still has funds. Is there a list of banks or websites that still want applications?

An SBA official here in New England said there was still $130 billion left in the fund as of July 31. That number surprised me, given that June 30 the agency reported having almost $132 billion in unallocated funds. So yes, there’s still billions of dollars available. This tool on the SBA’s website can help you find an eligible lender.

[The most recent SBA data, dated July 24, reports that over 5,005,261 loans have been made from 5,458 lenders and confirms that the PPP still has almost $130 billion in unallocated funds.]

6. If you don’t want to pay a lawyer or accountant to do the initial PPP loan application, given the August 8 deadline, how hard is it to understand and do yourself? Is there any way to get free guidance on what to do?

From what I’ve heard, most small businesses have been able to apply just with the help of a local banker, but really it’s going to depend on your circumstances, how much time you have, and your ability to dig out some financial history. The trickier part may be after you get the loan. You want to make sure you follow the rules so you can exercise the forgiveness features. This would mean you wouldn’t have to pay any or most of it back.

Check with your local SBA office for a list of partners who offer free advice. Or search online for one of the many webinars or how-to articles presented by law firms, accounting firms, and others. Just be sure and select a credible source.

7. If a small business has reopened and generated revenue, can it still meet the qualifications for a PPP loan?

Yes. Your business does not need to be closed to apply. In fact, this program is really designed to help you open and stay open during this down period.

8. Are these SBA loans really forgivable and tax-free? If you qualify for loan forgiveness, you don’t need to pay it back?

Yes, as long as you carefully follow the guidelines and spending restrictions.

9. The rules seem to have loosened since the first PPP was announced and launched. What’s different now in how and when a business can spend the money?

This is actually refreshing news. In June, the House and Senate both overwhelmingly agreed to revise the program with the Paycheck Protection Program Flexibility Act. This law lowered the portion of the PPP loan that must be spent on payroll to 60% from 75%. The rest must be spent on rent, utilities, and other business-related expenses. That law also did the following:

  • * Extend from 8 to 24 weeks the amount of time you can use the funds while remaining eligible for loan forgiveness
  • * Extend from 2 to 5 years the time new PPP loans must be paid back if the amount provided doesn’t convert into a grant (i.e. the forgivable part of the loan)
  • * Loan forgiveness remains possible if former employees won’t come back to work, or if revenue in December 2020 is below February 2020 levels
  • * Payroll tax deferment is now allowed too

The Continuing Small Business Recovery and Paycheck Protection Program Act does not change these rules, if you’re eligible to get a forgivable loan under it. And as I mentioned above, in Question #2, some in Congress want to expand eligibility even further.

10. Can companies use the PPP loan funding only for payroll to make it all forgivable?

No. Up to 40% can be spent on non-payroll expenses.

11. On July 6, the US Treasury and Small Business Administration (SBA) released the names and loan data of over 650,000 businesses that received forgivable Paycheck Protection Program (PPP) loans of more than $150,000. What’s the attitude and response of the companies in your area when their names appeared on this list?

Oh boy, this is a tricky one. There’s been multiple complaints that the data the SBA released was incorrect or drew incorrect conclusions. I fully appreciate the need to be transparent with how taxpayer dollars are spent, but this process was flawed at best

[For more about protecting your business from negative publicity about taking a PPP loan for coronavirus financial relief, and also separately prevent fraud accusations, see my articles Paycheck Protection Loan Backlash: How To Defend Your Business Reputation And Avoid Getting Shake Shacked and Federal Charges Of PPP Loan Fraud Are Here To Remind You These Loans Are Not “Free Money”.]

12. I’ve heard that after you get the loan funds, the application for loan forgiveness is much longer and more challenging. Is there any short form of it? Will this change also when there’s the new PPP?

There are two applications that you can choose from to complete. One is a “borrower-friendly” application and a separate form, dubbed by the SBA as the “EZ version”.

According to the SBA, three quarters of all applicants can use the EZ version. Here are the requirements:

  • * Are self-employed and have no employees; OR
  • * Did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; OR
  • * Experienced reductions in business activity as a result of health directives related to Covid-19, and did not reduce the salaries or wages of their employees by more than 25%

Continuing the Small Business Recovery and Paycheck Protection Program Act would also simplify the forgiveness application and documentation requirements for smaller loans under $150,000. You would not need to provide documentation required by the CARES Act. It does not quite make loan forgiveness automatic. You must attest to a good-faith effort to comply with Paycheck Protection Program loan requirements, you have to retain relevant records for three years, and you may need to complete and submit demographic information.

Borrowers with loans between $150,000 and $2 million also do not need to submit the documentation but must but must complete the certification required by the CARES Act. To ensure against fraud, the SBA can still audit and review loans of any size. [For more details on loan forgiveness, see Section 104 in the section-by-section summary of the Senate bill.]

13. Do I need to rehire all of my employees to make the loan forgivable? Can I still fire, or give bonuses to, those that work for me?

You do not need to rehire all the employees you laid off, or restrict your firing or rewarding of employees, which is confirmed in SBA guidance.

14. Can a nonprofit or charity apply for the PPP? Would it be a forgivable loan? Are the rules different?

Yes, 501(c)(3) nonprofits are eligible, following the same rules.

15. How does the Economic Injury Disaster Loan (EIDL) Emergency Advance differ from the PPP?

PPP loan recipients are also eligible to participate in the recently reopened EIDL program, as long as the two loans are for different purposes (so you don’t use the EIDL for payroll). While you must apply for a PPP loan through an SBA-approved lender, you must apply for EIDL directly through the SBA. You will hear directly from the SBA via email. Landlords and nonprofits are eligible for EIDL. This is big, since landlords couldn’t apply for PPP. The “EDIL Advance Program” is closed.

Trump Considering Unilateral Action As Stalemate Over Coronavirus Relief Continues

Trump considering unilateral action as stalemate over coronavirus ...

Source: ABC News, by Katherine Faulders and Allison Pecorin

As Congress continues to flounder on a path forward for the next phase of coronavirus relief, President Donald Trump said Monday that he was considering executive action if Congress fails to act.

“They’re not interested in the people, they’re not interested in unemployment. They’re not interested in evictions — which is a big deal. The evictions — they want to evict a lot of people,” Trump said. “They’re going to be evicted. But I’m going to stop it, because I’ll do it myself if I have to. I have a lot of powers with respect to executive orders and we are looking at that very seriously right now.”

It is not clear at this time what sort of unilateral steps the administration is considering taking without the input of Congress, though throughout negotiations on Capitol Hill, members of the administration have consistently stated that the president is keenly focused on unemployment benefits and protections for homeowners and renters.

“Unilateral action is certainly an option if the Democrats continue to find a plethora of ways to say no to reasonable options,” a senior administration official told ABC News.

Treasury Secretary Steve Mnuchin and the president’s Chief of Staff, Mark Meadows, did not respond to questions from reporters on Capitol Hill on Monday about any possible executive action by Trump.

Congress has been locked in a stalemate for weeks over how to move forward with a COVID-19 relief bill as several benefits and protections granted in the previous relief bill have expired.

Perhaps the most contentious negotiations have surrounded the $600-a-week expanded unemployment benefits passed in the last stage of coronavirus relief.

Democrats have argued that this benefit, which has since lapsed, was an essential lifeline for struggling Americans.

But Republicans have said that the benefit was paying some workers more than their previous earned income, and in turn was a disincentive to return to work. On Thursday, Republicans attempted to pass a reduced expansion of the unemployment program which would have paid unemployed Americans a $200 weekly bonus through the end of the year.

“We are creating a very perverse incentive for people to remain unemployed when our economy is calling for more workers,” said Sen. Ron Johnson, R-Wis., who proposed the extension.

But the move was blocked by Democratic Leader Chuck Schumer, who said the measure was a political stunt by Republicans.

“Even if we were to pass this measure the states say people would not get their unemployment for weeks and months all because of the disunity dysfunction of this Republican caucus,” Schumer said.

Democrats also blocked an attempt by Republicans to expand the $600 weekly unemployment benefit for a single week on Thursday.

While the Senate continues to squabble, negotiations between the administration and Democratic leadership are continued on Capitol Hill Monday.

Mnuchin and the Meadows met with Schumer and House Speaker Nancy Pelosi to discuss the bill again after over a week of tense negotiations.

Pelosi described Monday’s meeting as “productive” and “moving down the track” but said that there are still differences as the parties work to “understand what the needs are.”

Schumer said that they spent time during Monday’s negotiations going through the respective proposals by Democrats and Republicans.

“By going through the specific numbers and what each side thinks they can do with their dollar allocation, it really helps us understand that and move together in a better direction,” Schumer said.

The cost of the Republican proposal as it currently stands is around $1 trillion. The Democratic bill costs about $3 trillion to implement.

Mnuchin and Meadows have so far been unsuccessful in attempts to negotiate for a slimmed-down package.

Leaving their meeting on Monday, Mnuchin said, “We’re open to a bigger package if we can reach an agreement” and added that they are “a little bit” closer to a larger package.

But moments later, Meadows contradicted him, saying that the parties are so far apart that being open to more than $1 trillion is “not even a valid question.”

On Sunday, Mnuchin appeared on ABC’s “This Week” and said he and Meadows will be on Capitol Hill “every day until we reach an agreement.”

Following the Monday meeting, Mnuchin said he and Meadows will return to the Hill to continue negotiations on Tuesday.

Negotiations over the newest phase of coronavirus relief have been fraught with partisanship from the onset. Democrats in the House passed a $3 trillion relief bill in May, but it was not taken up by the Senate and the majority leader, Sen. Mitch McConnell, dismissed the Democratic effort as “partisan wish list.”

After a stall within their own conference, Republicans released their proposed bill on July 27. Schumer responded to the bill calling it “half-baked,” “half-hearted” and “too little too late.”

Progress Slow On Virus Relief Bill As Negotiations Continue

Progress slow on virus relief bill as negotiations continue

Source: Associated Press, by Andrew Taylor

Negotiators on a huge coronavirus relief bill reported slight progress after talks resumed in the Capitol, with issues like food for the poor and aid to schools struggling to reopen safely assuming a higher profile in the talks.

Multiple obstacles remain, including an impasse on extending a $600-per-week pandemic jobless benefit, funding for the U.S. Postal Service and aid to renters facing eviction. Democratic negotiators spoke of progress Monday but Republicans remain privately pessimistic.

“We are really getting an understanding of each side’s position. And we’re making some progress on certain issues moving closer together,” said Senate Minority Leader Chuck Schumer, D-N.Y.

After the meeting, Pelosi told her Democratic colleagues on a call that she’s hopeful a deal could be reached this week but doesn’t know if it’s possible, according to a Democratic aide who spoke on condition of anonymity to describe the private discussion.

Neither side has budged from their positions, with Democrats demanding an extension of the $600-per-week supplemental unemployment benefit that’s credited with propping up the economy. Republicans have yet to offer any aid to states to prevent furloughs, layoffs and cuts to services. Both will have to compromise before a deal can be agreed to.

“The $600 unemployment insurance benefit is essential because there are no jobs to go back to,” House Democratic Caucus Chair Hakeem Jeffries of New York said on MSNBC on Tuesday morning. “We’ve got to help out everyday Americans. That’s a line in the sand.”

Senate Republicans facing reelection in this fall’s turbulent political environment are among those most anxious for an agreement. Sen. John Cornyn, R-Texas, said Monday that the chamber should not go on recess without passing the huge relief measure, and Sen. Lindsey Graham, R-S.C., offered a jobless benefit proposal that’s more generous than a pending GOP alternative. Both are facing closer-than-hoped reelection bids in states that should be easy holds for Republicans.

Treasury Secretary Steven Mnuchin, a lead negotiator for President Donald Trump, said Monday that “we continue to make a little bit of progress” and that the administration is not insistent on a small-bore approach centered on extending the supplemental unemployment benefit and leaving other items for later. A GOP move to advance a slimmed-down relief package has been a recent point of conflict, with Democrats insisting there must be a comprehensive deal.

“We’re open to a bigger package if we can reach an agreement,” Mnuchin said.

On the Senate floor, McConnell, R-Ky., re-upped his complaint that Democrats are taking too tough a line. McConnell is not a direct participant in the talks but is likely to be an important force in closing out any potential agreement.

Speaking to reporters after the two-hour session, Democratic negotiators pressed the case for additional food aid, funding for the Postal Service, and the $600-per-week jobless benefit that lapsed last week. The benefit has helped sustain consumer demand over recent months as the coronavirus has wrought havoc. Pelosi wants to extend it through January at a $400 billion-plus cost, while Republicans are proposing an immediate cut to $200 and then replacing the benefit with a cumbersome system that would attempt to provide 70% of a worker’s “replacement wage.”

“It was productive, we’re moving down the track. We still have our differences, we are trying to have a clearer understanding of what the needs are, and the needs are that millions of children in our country are food insecure,” Pelosi said.

Most members of the Democratic-controlled House have left Washington and won’t return until there is an agreement to vote on, but the GOP-held Senate is trapped in the capital.

“I can’t see how we can go home and tell people we’ve failed, so I think that’s going to be a lot of pressure on everybody to come up with something,” said Cornyn, a close ally of McConnell. “It really is a matter of will. It’s not a matter of substance at this point. This is just a painful period between people finally deciding OK, we want a deal, and then what that deal will ultimately look like.”

Areas of agreement already include another round of $1,200 direct payments and changes to the Paycheck Protection Program to permit especially hard-hit businesses to obtain another loan under generous forgiveness terms.

On unemployment, Pelosi said she’d consider reducing the $600 benefit for people in states with lower unemployment rates. Republicans want to cut the benefit to encourage beneficiaries to return to work and say it is bad policy since it pays many jobless people more money than they made at their previous jobs.

Graham is among the Republicans who most aggressively protested the $600 benefit when it passed in March, But on Monday, he said that he wants to replace it with a system ensuring 100% of replacement wages, meaning the government would try to pay people as much to not work as to work.

The House passed a $3.5 trillion measure in May, but Republicans controlling the Senate have demanded a slower approach, saying it was necessary to take a “pause” before passing additional legislation. Since they announced that strategy, however, coronavirus caseloads have spiked and the economy has absorbed an enormous blow.

The Senate GOP draft measure carries a $1.1 trillion price tag, according to an estimate by the Committee for a Responsible Federal Budget. Republicans have not released any estimates of their own.

Surprise Billing Fix Faces Major Hurdles In Last-Minute Push

Senate health committee may change surprise billing proposals ...Source: Modern Healthcare, by Rachel Cohrs

Advocates of protecting consumers from surprise medical bills using a market-based payment benchmark are pushing to include their fix in the next COVID-19 relief package, but they face significant hurdles.

Two key House committees have revived discussions on surprise medical bill fixes, but it’s unclear whether they will be able to reach consensus in time for the next COVID-19 package, which could be the last major policy vehicle before the 2020 election. Even if they reach an agreement, the package’s prospects in the Senate look bleak. The White House wants a fix but is refusing to take sides.

Hospital and physician groups argue that a benchmark payment measure would hurt their payment rates. Hospital trade groups including the American Hospital Association, America’s Essential Hospitals, and the Federation of American Hospitals wrote to congressional leaders on Thursday bashing payment benchmarks and appealing to lawmakers to spare their bottom lines that have been harmed by COVID-19.

“Legislative proposals that would dictate a set payment rate for unanticipated out-of-network care are neither market-based nor equitable, and do not account for the myriad inputs that factor into payment negotiations between insurers and providers,” the groups wrote.

Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy, disputed the characterization that benchmarking proposals favor insurers exclusively over healthcare providers.

“It’s pretty neutral for insurers & most providers, outside of the big staffing companies leveraging surprise billing today,” Adler tweeted.
Hospitals favor an approach advanced by the House Ways & Means Committee. Ways & Means Chair Richard Neal (D-Mass.) was a primary reason why a surprise billing fix wasn’t included in a spending package in December.

“The chairman is optimistic that an agreement can be reached soon that puts patients first and protects their access to care, particularly in communities where providers have been hit hard by the COVID-19 crisis,” a Neal spokesperson said.

The White House has advocated vaguely for a solution to surprise medical bills since the end of 2019. HHS on Wednesday released a report arguing that Congress should act on surprise bills because transparency measures and coronavirus-related surprise billing measures advanced by the administration are not sufficient.

“It’s time for Congress to do what we all agree is necessary: combat surprise billing with an approach that puts patients in control and benefits all Americans,” HHS Secretary Alex Azar wrote in a statement.

However, HHS did not advocate for a certain fix. Instead, the agency highlighted similarities between three leading legislative proposals and said they all fit the administration’s desired criteria.

A senior HHS official told reporters Wednesday, “We have purposely tried to avoid being determinative in respect to what we think the exact legislative outcome should be knowing that is an active issue before the Congress.”

By supporting all three proposals, the Trump administration is essentially not backing any of them, said Thorn Run Partners senior vice president Shea McCarthy.

“Instead, the latest report from HHS has simply added more confusion to the debate on how to address this politically sensitive issue,” McCarthy said.

The HHS report did not evaluate an open-ended surprise billing ban pushed by the White House. ERISA Industry Committee senior vice president of health policy James Gelfand said it was notable that the HHS report also highlighted the role of private equity-backed physician staffing firms in the practice of surprise billing.

“This is new coming from the White House, not some lobbying group,” Gelfand said.

A bipartisan group of committee leaders from the leading Senate committee addressing the issue and two House committees argued that their approach that combines a market-based benchmark payment with an arbitration backstop already has wide consensus.

“The six of us — progressive Democrats and conservative Republicans — have agreed on a transparent, market-based solution that will lower patients’ premiums and will not interfere with strong protections states already have in place,” said Senate health committee Chair Lamar Alexander (R-Tenn.), Senate health ranking member Patty Murray (D-Wash.), House Energy & Commerce Chair Frank Pallone (D-N.J.), Energy & Commerce ranking member Greg Walden (R-Ore.), House Education & Labor Committee Chair Bobby Scott (D-Va.), and Education & Labor ranking member Virginia Foxx (R-N.C.).

However, Senate Majority Leader Mitch McConnell (R-Ky.) has struggled to keep his caucus united on another comprehensive COVID-19 package, so some GOP Senate aides and opponents of the benchmarking approach are skeptical that he would agree to tack on a bill that divides his caucus.

Federation of American Hospitals President and CEO Chip Kahn said it’s too early to tell whether any significant legislation could come out of the buzz, as committee chairs have been trying to get their legislative solutions included in several recent legislative packages.

“At the same time, there might be a compromise that addresses the problem that all the players, consumers and providers can all live with,” Kahn said.

Don’t Count on Lower Premiums Despite Pandemic-Driven Boon for Insurers

Private Insurance | KFFSource: Kaiser Health News, by Bernard J. Wolfson

When COVID-19 smacked the United States in March and April, health plans feared medical costs could skyrocket, jacking up premiums drastically in 2021, when millions of the newly unemployed might still be out of work.

But something else happened: Non-COVID care collapsed as hospitals emptied beds and shut down operating rooms to prepare for an expected onslaught of patients sickened by the coronavirus, while fear of contracting it kept people away from ERs, doctors’ offices and outpatient clinics. In many regions of the country, the onslaught did not come, and the billions of dollars lost by hospitals and physicians constituted huge savings for health plans, fattening their bottom lines.

But that doesn’t mean consumers will see lower premiums next year.

Numerous insurers across the country have announced plans to hike rates next year, though some have proposed cuts.

Peter Lee, executive director of Covered California, appeared skeptical about premium reductions in the state’s Affordable Care Act exchange, which is likely to announce 2021 health plan rates next week.

“Would we like zero increases? Absolutely. Would we like them negative? Yeah — but not if that means you’re going to increase premiums in a year by 20%,” Lee said in an interview with California Healthline this week. “We’ve been leaning on them to do what we always lean on them to do, and this is to have the lowest possible rates where you won’t be on a rate roller coaster. We want health plans to price right — not to price artificially low or artificially high.”

Covered California provides coverage for about 1.5 million residents who buy their own insurance.

If the insurance exchanges in other states offer any guidance for Covered California, it is in the direction of moderate premium increases for 2021, though there is wide variation.

A KFF analysis last week of proposed 2021 rates in the exchanges of 10 states and the District of Columbia showed a median increase of 2.4%, with changes ranging from a hike of 31.8% by a health plan in New Mexico to a cut of 12% in Maryland. (Kaiser Health News, which produces California Healthline, is an editorially independent program of KFF.)

Among the roughly one-third of filings that stated how much COVID-19 added to premiums, the median was 2%, with estimates ranging from minus 1.2% at a plan in Maine to 8.6% at one in Michigan.

The proposed premiums for ACA marketplace plans do not affect job-based coverage, but they may indicate how the pandemic is affecting premiums generally.

The consensus among industry experts is that COVID-19 has generated little pressure for rate rises, and health plans should err on the side of moderation. But some fear that many insurers will hold onto the reserves they’ve built up, citing the possibility of widespread vaccinations and concerns that the care forgone in 2020 could rebound with a vengeance next year.

“The tendency of health plans, when they are faced with any degree of uncertainty, is to be very conservative and price for the worst-case scenario,” said Michael Johnson, an industry observer and critic who worked as an executive at Blue Shield of California from 2003 to 2015. “Actuaries are less likely to get fired if the plan prices too high than if the plan prices too low. But I think regulators really need to push back hard on that.”

Lee said all 11 insurers participating in the exchange this year will remain in 2021, and no new ones will be added to the mix, though some of the current carriers will extend their coverage geographically. Ninety percent of consumers who buy their own health insurance get subsidies from the federal government or the state to help pay their premiums.

In January, California became the first state to offer subsidies to middle-income people who make too much money to qualify for federal subsidies. The lion’s share of the state subsidies is earmarked for those who earn between 400% and 600% of the federal poverty level, or $51,040 to $76,560 a year for an individual and $104,800 to $157,200 for a family of four.

The rate proposals expected to be unveiled next week will be subject to scrutiny by state regulators before they are finalized. Sign-ups for the plans start Nov. 1 and run through Jan. 31. This year, the average Covered California rate increase statewide was 0.8%, the lowest since the exchange started providing coverage in 2014.

The benefits reaped by health plans so far in the pandemic can be seen in strong second-quarter earnings and reduced spending on care. UnitedHealth Group, the nation’s largest health insurer, announced earlier this month that its net profit in the April-June quarter nearly doubled from the same period a year earlier. Its medical spending plummeted from 83.1% of premium revenue to 70.2% over that period.

Anthem, the parent company of Blue Cross of California, reported Wednesday that its net profit in the second quarter doubled from the same period in 2019, also on the back of plunging medical expenses.

Anthem said it offered one-month premium credits ranging from 10% to 50% to enrollees in individual, employer and group dental policies — including its Blue Cross plans in California.

UnitedHealth said it has provided $1.5 billion worth of financial support to consumers so far, including premium credits and cost-sharing waivers, and expects to pay out $1 billion in rebates.

But UnitedHealth, which does not participate in Covered California, is seeking a rate increase of 13.8% in the New York exchange. Anthem, which covers about 80,000 people in Covered California, is planning rate hikes of 16.6% in Kentucky and 9.9% in Connecticut.

On the other hand, Kaiser Permanente, which covers more than one-third of Covered California enrollees, plans rate cuts in other states, ranging from 1% in Hawaii to 11% in Maryland. (Kaiser Health News, which produces California Healthline, is not affiliated with Kaiser Permanente.)

Lee downplayed the notion of a financial boon for California health plans, saying that, partly because of the use of telehealth, primary care has rebounded and the plans are paying for it. “So we don’t see this as being at this point a bonanza year for health plans,” he said. “Rather, it’s a year in which there are lessons learned for how we can deliver care in a pandemic.”

Still, the health plans are in a far stronger position than they had feared earlier this year.

In March, Covered California released a study showing that COVID-19’s impact on 2021 premiums for individuals and employers could range from an increase of 4% to more than 40%. But less than three months later, projections commissioned by the industry’s national advocacy group, America’s Health Insurance Plans, showed that even in the worst-case scenario of a 60% COVID infection rate — far above where it stands now — the pandemic would increase medical costs in 2020 and 2021 by 6% at most, and could even decrease them.

That moderate effect is largely attributable to what Katherine Hempstead, a senior policy adviser at the Robert Wood Johnson Foundation, called “a kind of yin and yang: If you have a lot of COVID, you don’t have a lot of other health care spending.”

Independent of the course the pandemic takes, emergency room and outpatient visits still lag behind pre-COVID levels and will probably continue to do so next year, to the continued benefit of insurers, predicted Glenn Melnick, a professor of health care finance at the University of Southern California’s Sol Price School of Public Policy. That could be good news for consumers, he said, potentially leading to lower premium increases or even reductions next year.

On the other hand, hospitals and doctors have lost money, and the ones whose contracts with health plans are up for renewal will be looking to make up those losses, Melnick said.

“Providers could be asking for 20-25% increases next year,” he said, “and if they’ve got market power, they can make it stick.”

California Has The Most Coronavirus Cases Of Any State, But There Are Signs Of Hope, Newsom Says

California coronavirus cases exceed 500,000, surpassing N.Y. - Los ...

Source: Los Angeles Times, by Laura J. Nelson, Leila Miller

After a record-breaking month of fatalities linked to the coronavirus pandemic, California hit a grim milestone over the weekend: 500,000 confirmed cases of COVID-19, the most of any state.

The overall increase in cases, now more than 516,000, comes as deaths surge. In July, California broke the single-day record for deaths five times, and three of those record-setting days occurred last week.

Gov. Gavin Newsom said Monday that the Central Valley has overtaken Imperial County as the state’s hot spot. Eight Central Valley counties have seen hospitalization and infection rates that far outpace the rest of the state.

“We don’t want to see it go to where Imperial went,” Newsom said.

Over the last two weeks, California saw an average of 121 deaths per day, Newsom said. On Friday, the state reported 214 fatalities, 21% more than the previous record, set two days prior.

Still, there are some early signs of hope, Newsom said. The number of people hospitalized statewide has fallen about 10% over two weeks, and admissions to intensive care units have fallen by 5%, he said.

The share of positive COVID-19 tests has fallen to 7%, even as the state has significantly expanded its testing capacity, Newsom said.

The rate of Californians testing positive is “not where it needs to be, and it’s still too high,” he noted. “But again, it’s good to see this number trending down, not trending up.”

Newsom attributed the modest improvements to better adherence to mask rules and social distancing and new “very, very difficult” state rules that shut down bars and other industries.

But two weeks of data heading in the right direction are not enough to instill confidence, he said.

“We can quickly find ourselves back to where we were just a few weeks ago, a month ago, with significant increases if we do not maintain our vigilance, if we do not maintain our focus,” Newsom said. “This virus is not going away. It’s not just going to take Labor Day weekend off. It’s not going to take Halloween off, the holidays off.”

About 97% of the state’s residents live in a county that Newsom has flagged for high rates of disease transmission, high rates of positive tests or both. The 38 counties on the watchlist include every county in the Bay Area and in Southern California.

L.A. County health officials Monday expressed optimism that community spread of the coronavirus has slowed, saying this may be due to fewer opportunities for transmission in high-risk settings.

Officials said there were an average of 2,600 cases per day in the last week, down from a couple of weeks ago, when the daily count topped 3,000. On Monday, the Department of Public Health reported more than 1,600 new cases and 12 deaths, as well as 1,784 people hospitalized with confirmed cases of COVID-19.

The county’s seven-day positivity rate, or the average number of positive test results among all those tested in that period, remained mostly flat during July — hovering between 8% and 8.8%. The number of hospitalizations has been trending downward, officials said, noting that the current average of 2,000 hospitalizations is down from 2,200 in the middle of July.

Officials cited bar closures and businesses shifting from indoor to outdoor operations several weeks ago for the gains.

“The key indicators that we closely monitor at Public Health are looking positive, and I want to give credit to a large number of our county residents who heeded our orders and took the personal, basic actions needed to slow this virus,” Barbara Ferrer, director of L.A. County’s Department of Public Health, said in a statement.

“But for our long-term success, we need to continue limiting the spread of COVID-19. We can’t simply go back to life as we knew it before March. We unfortunately still have a long way to go; we must remain vigilant.”

In Imperial County, a surge in COVID-19 cases earlier this summer left the county’s two hospitals so overwhelmed that more than 650 patients were moved to healthcare facilities in other parts of the state, Newsom said. The number of new daily cases is now steadily falling.

In the Central Valley, Kern County is seeing 1,370 positive cases per 100,000 residents, the most in the state, according to the Los Angeles Times coronavirus tracker. Kings, Merced, Colusa, Tulare, Stanislaus, Fresno and San Joaquin counties are all seeing more than 500 cases per 100,000 residents.

The pandemic continues to disproportionately affect Black and Latino residents, and the disparity is widening. After adjusting for population, Latino residents are now 3.1 times more likely to test positive than white people.

Three-quarters of California’s COVID-19 victims have been older than 65, according to state data. But the share of younger people who are sickened and hospitalized is rising.

The first child in California to die of complications from COVID-19 was a teenager in Fresno, officials said last week.

“This is a sober reminder of how deadly this disease is, and how it can impact anybody,” Newsom said.

Trump Wants Broader Role For Telehealth Services In Medicare

Trump wants broader role for telehealth services in MedicareSource: Associated Press, by Ricardo Alonso-Zaldivar

The Trump administration is taking steps to give telehealth a broader role under Medicare, with an executive order that serves as a call for Congress to make doctor visits via personal technology a permanent fixture of the program.

The order President Donald Trump signed on Monday applies to one segment of Medicare recipients — people living in rural communities. But administration officials said it’s intended as a signal to Congress that Trump is ready to back significant legislation that would permanently open up telehealth as an option for all people with Medicare.

His administration is “taking action to make sure telehealth is here to stay,” Trump said.

Monday’s executive order will also set in motion an experiment under which hospitals in rural communities could receive a more predictable stream of Medicare payments in exchange for delivering better performance on certain measures of quality.

The steps are modest — far short of the health plan Trump promised when he was elected but has not been able to deliver. Still, Trump is trying to send a signal to voters in rural areas, where long road trips for medical care are common, that he has not lost sight of their interests.

The telehealth measure directs the departments of Agriculture and Health and Human Services, as well as the Federal Communications Commission, to work together to build up the infrastructure to support telehealth in rural communities.

And it aims to permanently expand the kinds of services that can be provided via telehealth. Officials said examples include emergency room visits, nurse consultations, and speech and occupational therapy.

Medicare has greatly expanded its coverage of telehealth across the country as part of its emergency plan to confront the coronavirus pandemic. But that expansion will end in most places once the public health emergency is over.

The administration has regulatory authority to permanently expand some services in rural areas, but Congress must sign off on a broader program that would make telehealth a regular option for people living in cities and suburbs. There’s bipartisan support for that, but it’s unclear anything can happen before the November election.

Medicare statistics show telehealth has been popular. Officials expanded payment for such services as a way to keep seniors safe at home, avoiding the risk of catching the virus by venturing out for a medical appointment. In the last week of April, 1.7 million Medicare recipients relied on telehealth. Before the pandemic the number was only in the thousands.

In a statement, Medicare Administrator Seema Verma predicted telehealth will become the modern equivalent of the house call.

“In an earlier age, doctors commonly made house calls,” she said. “Given how effectively and efficiently the health care system has adapted to the advent of telehealth, it’s become increasingly clear that it is poised to resurrect that tradition in modern form.”

Potential Impact of Stay-at-Home Orders on Health Insurance Rates

Potential Impact of Stay-at-Home Orders on Health Insurance Rates ...


Most Americans receive health insurance through their job or a family member’s job. So, when workers lose their jobs, they — and their family members — run the risk of losing their health coverage as well.

Previously released estimates from the U.S. Census Bureau’s Current Population Survey Annual Social and Economic Supplement (CPS ASEC) show that about 55.1% of the U.S. population — some 178 million people — had employer-sponsored insurance or ESI in 2018.

A more detailed portrait of ESI gives us a glimpse at those who may be at risk of losing their health insurance in light of recent economic upheaval due to COVID-19.

Workers in Key Occupations

Recent economic shifts have likely affected workers in certain jobs more than in others. Media coverage has heavily focused on workers in food service and retail occupations who have lost jobs due to social distancing measures and the closing of non-essential businesses in many states.

According to the Bureau of Labor Statistics, the unemployment rate in service occupations (which include food service jobs) was 27.1% in April 2020.

While data on how these recent changes have affected coverage within households are not yet available, we can use the CPS ASEC to examine coverage for workers in these jobs in 2018 and their families.

We focus on the following occupations that are among those affected during the pandemic and therefore most at risk of losing health coverage: food preparation and serving; building and grounds cleaning and maintenance; personal care and service; and retail sales.

Collectively, 39.6 million people worked in these jobs in 2018, representing 23.6% of all workers.

Some key findings:

  • * The majority (55.2%) of workers (about 21.9 million) in one of these occupations had ESI plans.
  • * Slightly under a third (32.0%) of workers in these jobs were the policyholders. That is, the plan was in their name and their employment (as opposed to their spouse’s or a parent’s employment) made them eligible to enroll.

What About the Children?

In 2018, about 38 million children under 19 years had health insurance through their parents’ ESI plan. This represents nearly one-half (49.1%) of all U.S. children under 19.

About 22.8% of children with parents employed in the above occupations (food preparation and serving; building and grounds cleaning and maintenance; personal care and service; and retail sales) were on a parent’s ESI plan. This means that ESI plans with workers in jobs likely affected by a shrinking economy covered 4.3 million children in 2018.

California May Offer $600 A Week In Extra Jobless Benefits If Congress Doesn’t Act

California may offer $600 a week in extra jobless benefits if ...Source: San Francisco Chronicle, by Dustin Gardiner

If Congress doesn’t act to extend an extra $600 in weekly benefits for unemployed Californians, state legislators say they’re ready to jump in to prevent benefits from plunging during the pandemic.

The expanded federal unemployment benefits, which began in April, are set to expire Friday. That will reduce the average jobless payment in California to about $338 a week.

The House passed a coronavirus relief bill in May that would extend the $600 weekly checks through Jan. 31, but the GOP-led Senate has yet to act. Republicans released a package late Monday that proposes to cut the aid to $200 a week.

Democratic legislative leaders unveiled an outline of their proposal Monday to extend the $600 payments as part of a $100 billion stimulus plan designed to ease the damage the pandemic is causing to Californians and the state’s economy.

“Millions of Californians are suffering in this economic downturn, and Republicans in Washington, D.C., don’t seem to care,” Assembly Speaker Anthony Rendon, D-Lakewood (Los Angeles County), said in a statement.

Legislators said that they intend to fill any gaps in the $600 unemployment benefit if Congress approves a smaller amount, and that they want to extend the payments to undocumented immigrants who have lost their jobs.

Legislative leaders said the additional benefit is crucial to prevent an economic collapse and ensure working families can keep their housing and pay for groceries and other necessities.

Many lawmakers said the stimulus plan would shorten the recession and spur job growth. Without aggressive intervention, they warn, the long-term impacts of the pandemic could be far worse.

Assemblyman Phil Ting, a San Francisco Democrat who chairs the budget committee, was part of a group of legislators who helped craft the outline over the last four months.

“We’re hearing from so many people that they’re one unemployment check away from getting evicted, from losing their home,” he said. “If we can forestall financial disaster for them, there’s a huge long-term benefit for those families, but also for the state.”

He called the bill “a huge economic stabilizer.”

The outline of Democratic legislators’ proposal calls for immediately expanding a host of safety-net programs for people and small businesses, though it provides few details about the cost or scope. Among the proposals:

• Expand the earned-income tax credit, an assistance program for low-income filers.

• Help schools cover the costs of reopening for in-person education, and provide more funding to expand broadband access in underserved communities for students being taught online.

• Protect renters from eviction and give support to struggling homeowners and landlords. Legislators are already considering measures to extend a freeze on evictions and foreclosures.

• Expand tax breaks for small businesses, and expand a program that allows them to delay paying sales taxes.

• Create incentives for California companies to manufacture masks and other protective and testing equipment.

Legislators said they estimate the stimulus package could total $100 billion. They outlined a host of unconventional accounting moves that could bring in the extra money, many of which involve borrowing against expected future revenue.

One maneuver would allow California to sell tax vouchers, which would allow companies to prepay their taxes for future years at a discount.

The plan also calls for borrowing money from several sources. For example, legislators said the state could borrow and repay debt with revenue from utility fees, transportation funds or cap-and-trade auctions.

In many ways, the outline is more of a wish list than a detailed plan, but it will help set the tone as legislators negotiate with Gov. Gavin Newsom. They have little time to get a major deal done — the Legislature is scheduled to adjourn for the year Aug. 31, though Newsom could call lawmakers back for a special session.

The governor declined to comment immediately on the plan released Monday.

“I would be remiss to comment until I have a chance to review the details,” Newsom said at a news conference. “We have to include a framework of bringing people along as we reopen our economy.”

Legislators said they also want to create jobs by increasing spending on infrastructure projects. Their plan calls for issuing bonds more quickly to accelerate road repairs.

The plan also calls for funding projects to combat climate change and pollution. Legislators said they want to create green jobs by investing in wildfire prevention efforts, clean drinking-water systems, new recycling facilities and charging stations for electric cars.

“As the old adage goes, don’t let a crisis go to waste,” Assemblyman Kevin Mullin, D-South San Francisco, said in a statement. “Now is the time to take decisive action to stimulate the California economy by investing in infrastructure with an eye toward a cleaner economy.”

Employers Require COVID Liability Waivers as Conflict Mounts Over Workplace Safety

Employers Require COVID Liability Waivers as Conflict Mounts Over ...

Source: Kaiser Health News, by Harris Meyer

After spending a May day preparing her classroom to reopen for preschoolers, Ana Aguilar was informed that the tots would not have to wear face masks when they came back. What’s more, she had to sign a form agreeing not to sue the school if she caught COVID-19 or suffered any injury from it while working there.

Other teachers signed the form distributed by the Montessori Schools of Irvine, but Aguilar said she felt uncomfortable, although it stipulated that staff members would be masked. At 23, she has a compromised immune system and was also worried that she could pass the coronavirus on to her fiancé and other family members.

Aguilar refused to sign, and a week later she was fired. “They said it was my choice to sign the paper, but it wasn’t really my choice,” said Aguilar, who’s currently jobless and receiving $276 a week in unemployment benefits. “I felt so bullied.”

As employers in California and across the country ask employees to return to the workplace, many have considered and some are requiring employees to sign similar waivers, employment lawyers say. And many employees, mostly lower-wage and minority workers in essential jobs, are calling lawyers to complain about the waivers.

“These are illegal agreements that are totally unfair to workers,” said Christian Schreiber, a San Francisco lawyer who represents Aguilar and other employees.

The California State Legislature last year passed a law, AB-51, prohibiting employers from requiring employees or job applicants to sign away their right to pursue legal claims or benefits under state law. The law, which also prohibits firing any employee for refusing to sign, is being challenged in court by business groups.

Only a few employers have forced employees to sign liability waivers, at least partly because these waivers likely would be held unenforceable by courts, lawyers who represent employers say.

“Courts don’t recognize them because of the unequal bargaining power between employers and employees,” said Isaac Mamaysky, a partner at the Potomac Law Group in New York City. “With so many unemployed, people would sign just about anything to get a job.”

Another reason they are considered unenforceable: Workers who get sick or injured on the job generally are compensated through state workers’ compensation systems rather than through the courts, and state laws don’t allow employers to force employees to sign away their right to pursue workers’ comp claims, Mamaysky said.

Companies may have the right to require nonemployees working on their premises to sign COVID waivers. When the New York Stock Exchange reopened in late May, it made floor traders sign a form clearing the exchange of liability if they contracted COVID-19. That was legally permissible because the traders were not exchange employees, an NYSE spokesman said. He declined to say whether any traders have become infected with the virus.

The Las Vegas-based restaurant chain Nacho Daddy, which did require employees to surrender their right to sue over COVID-19, reportedly fired some who refused. Following negative media coverage, Nacho Daddy removed the language that waived legal rights and instead had employees agree to follow safety rules such as masking and social distancing. The company did not respond to a request for comment.

Having employees agree to comply with safety rules is a more common and legally acceptable approach than waivers.

“I suggest my clients go to this reasonable middle ground: Here’s what we promise to you, here’s what we want you to promise to us,” said David Barron, an employment lawyer with Cozen O’Connor in Houston.

Business groups hope Senate Majority Leader Mitch McConnell will make liability waivers unnecessary. He has proposed a Senate bill with broad liability protection for employers for five years against a range of coronavirus-related claims, and says he won’t back any COVID relief bill that doesn’t include such protections. President Donald Trump has said he supports the liability protection.

At least 10 states already have enacted laws providing some form of immunity for businesses from lawsuits brought by employees and others who contract COVID-19. Similar bills are pending in about 10 more states, according to the National Employment Law Project. The California Assembly is considering a liability protection bill for public K-12 schools.

Federal legislation to provide COVID liability relief for employers should protect only those that follow applicable health and safety guidelines, said John Abegg, executive vice president of the U.S. Chamber Institute for Legal Reform, which supports McConnell’s proposal.

But even if McConnell is able to overcome Democratic opposition and pass liability protection as part of a new pandemic economic relief bill, that still wouldn’t shield employers from lawsuits claiming gross negligence or reckless or intentional conduct in failing to implement COVID-19 safety precautions.

Across the country, hospitals and nursing homes, as well as companies like McDonald’s, Walmart and Safeway, have been hit with wrongful death lawsuits filed by families of employees who died from the virus. They typically cite egregious conduct that goes beyond ordinary negligence, potentially erasing any statutory liability relief.

Nearly 50 COVID-related lawsuits have been filed relating to conditions of employment, including exposure to the coronavirus or the lack of protective equipment, according to data collected by the law firm Hunton Andrews Kurth.

In many states, alleging intentional misconduct also may allow workers harmed by COVID-19, and their families, to file lawsuits rather than go through the workers’ compensation system, and thus seek bigger damage awards.

For instance, a suit filed in Alameda County Superior Court in June by the widow of a longtime employee of Safeway’s distribution center in Tracy, California, alleged that the company had concealed a COVID-19 outbreak from workers and informed them that personal protective equipment was not recommended, contrary to guidelines from federal and state authorities.

“I don’t know of any jurisdiction that would allow a waiver against intentional misconduct,” said Louis DiLorenzo, head of the labor and employment practice for Bond Schoeneck & King in New York, who represents employers. “That would encourage misconduct.”

Worker advocates argue that lawsuits like the one against Safeway should be encouraged — rather than blocked by waivers or immunity laws — to bring to light serious public safety problems. Cases against McDonald’s in Oakland and Chicago — in which workers claimed the restaurants had created a “public nuisance” by not taking steps to adequately protect workers and customers from COVID-19 — resulted in court orders in late June for those McDonald’s restaurants to implement safety measures such as masks, social distancing and temperature checks.

“A very tiny number of cases are being filed by workers, and those cases are valuable,” said Hugh Baran, a staff lawyer at the National Employment Law Project. “These are the kinds of claims we should want workers to bring.”

Schreiber said he contacted the Montessori school about Aguilar’s firing, and it offered to reinstate her without having her sign the waiver. But Aguilar declined, saying the school was putting teachers at risk by not requiring pupils to wear masks. The school then offered her six weeks of severance pay, which she is considering.

By refusing to sign the waiver or accept her job back, she said, she was standing up for all the teachers at the school, many of whom have children and can’t afford to lose their job.

“I liked my job and I needed the paycheck,” Aguilar said. “But making you sign these papers is telling you that whatever happens, they really don’t care.”

Last Updated 08/04/2020

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