How to Manage COVID-19 Related Business Risks

The coronavirus (COVID-19) outbreak has had a crippling effect on the global economy. This is clearly uncharted territory. As millions around the globe do their best to minimize their exposure to the virus, business owners and managers face an uncertain and stressful future.

Faced with faltering demand, anxious employees, health safety risks and a lack of clarity regarding what the future holds, what can small and medium-sized business owners do to prepare for a global economic slowdown? Here are eight steps to consider to help your company navigate these uncertain times.

1. Develop Financial Scenarios

Create best, worst and most likely financial scenarios for your company. Consider these questions:

• How much do you estimate revenue will change over the short and long run?
• Which costs are variable vs. fixed?
• How long will it take for you to run out of cash and inventory?
• Is there extra cushion to draw from on your line of credit?

Projecting financial statements for the next few months may require some guesswork, but the exercise may uncover areas that require immediate attention. For example, you may find an opportunity to reduce your costs by canceling, say, a subscription or downgrading a service.

2. Scrutinize Your Cost Structure

It’s important to dedicate additional time to combing through every line item of your financial statements for costs to remove. As a general rule of thumb, if an expense doesn’t directly contribute to generating revenue, consider removing it. Also look for ways to lower your costs. For example, if you’ve not switched insurance companies recently, now may be the time to seek an alternative, lower-cost provider.

3. Reach Out to Lenders, Landlords and Creditors

As the effects of the economic slowdown take hold, many business owners worry that they’ll default on a loan, face an eviction or be sued for unpaid debts. The federal government and many individual states have already taken steps to stop evictions. How far such government remedies extend and for how long remain unknown.

If your business is unable to make a payment on a loan, mortgage or unsecured debt, be proactive and reach out to share your situation. You may find those you owe money to are receptive to amending the terms of your arrangement in these challenging times.

4. Reconnect with Key Customers

Reach out to major customers and learn of the challenges they face. This provides an opportunity to engender long-term customer loyalty and goodwill. Depending on your company’s financial health, you may be able to offer support, including providing discounts on future orders or extending payment terms.

These conversations also will provide information to improve the accuracy of your financial projections. And you’ll open the line of communication in case circumstances deteriorate further.

5. Communicate Regularly with Employees

It’s human nature to struggle with uncertainty. Make communicating with employees a priority — even if you have no news to share.

Employees need to know you understand their concerns. They must also believe you have their best interests at heart. If you anticipate laying off staff or cutting their hours and know of companies in a hiring mode, share that information with employees. When normal operations resume, former employees may return if they remember your willingness to help them in times of crisis.

6. Revisit Your Staffing Model

Ideally, small businesses would like to keep valued employees on the payroll as long as possible. But, for some businesses, now might be the time to engage contractors instead of full-time employees. By doing so, you’ll potentially lower your costs and increase your staffing model’s flexibility.

7. Consider Bartering

Instead of exchanging cash with supply chain partners, be open to bartering goods and services with other businesses. Bartering allows you to conserve cash. Plus, connecting with other businesses may help uncover additional tools and techniques to help your company weather the economic fallout from the COVID-19 outbreak. (Be aware that bartering does have tax implications, however.)

8. Monitor Government Responses

Federal and state governments are working on various financial relief measures to help businesses during these trying times. In addition to following local and national news, reach out to your tax, human resources and legal advisors to let them know you’re interested in gaining access to government aid when it becomes available. Also sign up for email communications from federal agencies, including the Small Business Administration (SBA) and the IRS, to make sure you learn of the programs as soon as they’re available.

9. We’re All in this Together

Now’s the time to confront the reality of COVID-19 head on. That requires a collaborative effort with your customers, suppliers, employees, creditors and professional advisors. By working together to fortify your defenses, you’ll be in a better position to protect your business and ensure its survival during these unprecedented times. 

View all Yeo & Yeo’s Covid-19 Resources.

The coronavirus (COVID-19) pandemic has already had widespread effects on the U.S. economy. Demand for many goods and services has stalled. Unemployment claims have skyrocketed. And many schools and businesses are operating online — if at all. Life has changed dramatically across the country.

The federal government has been working on various relief measures to help individuals and small businesses cope with the situation, including tax relief provisions. Here are the tax changes that have been finalized so far.

Guidance on Federal Income Tax Deadline Deferrals

On March 20, U.S. Treasury Secretary Steven Mnuchin announced on Twitter that the April 15 federal income tax filing deadlines will be extended until July 15. His tweet says, “All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.” It’s unclear at this point whether the extension will apply to the tax return filing deadlines for federal payroll taxes (Social Security and Medicare taxes) owed by employers or for federal estate and gift taxes.

In addition, on March 21, the IRS issued Notice 2020-18, which clarifies that individual taxpayers and corporations can defer until July 15 federal income tax payments that would otherwise be due on April 15. (Normally, when you file an extension, you must still make a good-faith estimate of your tax liability and, by the normal filing deadline, pay the full amount estimated to be due. This relief measure is an exception to the general rule.)

Specifics under Notice 2020-18 are as follows:

For individuals. Individual taxpayers can defer payment of federal income tax (including any self-employment tax) owed for the 2019 tax year from the normal April 15 deadline until July 15. They can also defer their initial quarterly estimated federal income tax payments for the 2020 tax year (including any self-employment tax) from the normal April 15 deadline until July 15.

Individuals who have non-salary income — such as self-employed people, investors and rental property owners — must normally make quarterly estimated tax payments to avoid an IRS interest charge penalty.

Individuals can defer their tax payments until July 15, with no interest or penalties, “regardless of the amount owed.” (Earlier IRS guidance imposed a $1 million limit, but that limit was eliminated by Notice 2020-18.)  

For corporations. Corporations that use the calendar year for tax purposes can defer until July 15 any amount of federal income tax payments that would otherwise be due on April 15 with no interest or penalties. This relief covers the amount owed for the 2019 tax year and the amount due for the first quarterly estimated tax payment for the 2020 tax year. Both of those amounts would otherwise be due on April 15. (Earlier IRS guidance imposed a $10 million limit, but that limit was eliminated by Notice 2020-18.)

For trusts and estates. Trusts and estates pay federal income taxes, too. Federal income tax payments for the 2019 tax year of trusts and estates that use the calendar year for tax purposes are due on April 15. The initial quarterly estimated federal income tax payments for the 2020 tax year of trusts and estates that use the calendar year for tax purposes are also due on April 15.

Notice 2020-18 clarifies that trusts and estates can defer any amount of the aforementioned tax payments from April 15 to July 15 with no interest or penalties.

Important: Notice 2020-18 offers no relief for paying federal payroll taxes (Social Security and Medicare taxes) owed by employers — or federal estate and gift taxes. But additional relief measures may be under construction in Congress.

Tax Provisions in the Families First Coronavirus Response Act

On March 18, President Trump signed into law a COVID-19 relief bill. It’s called the Families First Coronavirus Response Act. The new law mandates paid leave benefits for small business employees affected by the COVID-19 emergency and establishes related tax credits and Social Security and Medicare (FICA) tax relief for their employers.

Tax credits for emergency leave payments to employees. The new law grants tax credits to small employers to cover payments to eligible employees while they take time off under the mandatory emergency COVID-19 paid sick leave and paid family leave provisions. These provisions apply to employers with less than 500 employees.

Emergency paid sick leave under the new law is limited to $511 per day for up to 10 days (up to $5,110 in total) for an employee who’s in COVID-19 quarantine or seeking a COVID-19 diagnosis. An employee can also receive emergency COVID-19 paid sick leave of up to $200 per day for up to 10 days (up to $2,000 in total) to care for a child whose school or childcare location has been closed or whose childcare is unavailable due to COVID-19. 

In addition, the law gives an employee the right to take up to 12 weeks of job-protected family leave if the employee or a family member is in COVID-19 quarantine or if the school or childcare location of the employee’s child is closed due to the outbreak. The employer must pay at least two-thirds of the employee’s usual pay, up to a maximum of $200 per day, subject to an overall maximum of $10,000 in total family leave payments.

To help employers cover these now-mandatory emergency leave payments, the law allows a refundable tax credit equal to 100% of qualified sick leave wages and family and medical leave wages paid by the employer.

The credit applies only to eligible leave payments made during the period beginning on a date specified by Treasury Secretary Mnuchin and ending on December 31, 2020. The beginning date will be within 15 days of March 18, 2020.

The new law increases the credit to cover a portion of an employer’s qualified health plan expenses that are allocable to emergency sick leave wages and emergency family leave wages.

The credit is first used to offset the Social Security tax component of the employer’s FICA tax bill. Any excess credit is refundable, meaning the government will issue a check to the employer for the excess. 

Important: The credit isn’t available to employers that are already receiving the pre-existing credit for paid family and medical leave under Internal Revenue Code Section 45S.

Employer FICA tax relief. Qualified sick leave and family leave payments mandated by the new law are exempt from the 6.2% Social Security tax component of the employer FICA tax on wages. Employers must pay the 1.45% Medicare tax component of the FICA tax on qualified sick leave and family leave payments, but they can claim a credit for that outlay. 

Credits for self-employed people. For a self-employed individual who’s affected by the COVID-19 emergency, the new law allows a comparable refundable credit against the individual’s federal income tax bill. If the credit exceeds the individual’s federal income tax bill (including the self-employment tax), the excess will be refunded via a check from the government. The credit equals:

• 100% of the self-employed person’s sick-leave equivalent amount, or

• 67% of the person’s sick-leave equivalent amount for taking care of a sick family member or taking care of the individual’s child following the closing of the child’s school or childcare location.

The sick-leave equivalent amount equals the lesser of:

• The individual’s average daily self-employment (SE) income, or

• $511 per day for up to 10 days (up to $5,110 in total) to care for the individual or $200 per day for up to 10 days (up to $2,000 in total) to care for a sick family member or a child following the closing of the child’s school or childcare location.

In addition, a self-employed individual could receive a family leave credit for up to 50 days. The credit amount would equal the number of leave days multiplied by the lesser of:

• $200, or

• The individual’s average daily SE income.

The maximum total family leave credit would be $10,000 (50 days x $200 per day).

Credits for self-employed individuals are only allowed for days during the period beginning on a date specified by Treasury Secretary Mnuchin and ending on December 31, 2020. The beginning date will be within 15 days of March 18, 2020.

Important: To properly claim the credit, self-employed individuals must maintain whatever documentation the IRS requires in future guidance. Contact your tax professional for details.   

Moving Target

This article only covers some of the COVID-19-related tax changes that have already been finalized. Other types of non-tax federal relief have also been made available and many states have announced their own COVID-19 relief. More federal measures and additional guidance are expected soon. Contact your tax professional to discuss financial relief measures that apply in your specific situation.  

View all Yeo & Yeo’s Covid-19 Resources.

Businesses across the country are being affected by the coronavirus. Fortunately, Congress recently passed a law that provides COVID-19 tax relief. In a separate development, the IRS has issued guidance allowing taxpayers to defer any amount of federal income tax payments due on April 15, 2020, until July 15, 2020, without penalties or interest. 

New law
On March 18, the Senate passed the House’s coronavirus bill, the Families First Coronavirus Response Act. President Trump signed the bill that day. It includes:

• Paid leave benefits to employees,
• Tax credits for employers and self-employed taxpayers, and
• FICA tax relief for employers.

Tax filing and payment extension

In Notice 2020-18, the IRS provides relief for taxpayers with a federal income tax payment due April 15, 2020. The due date for making federal income tax payments usually due April 15, 2020 is postponed to July 15, 2020.

Important: The IRS announced that the 2019 income tax filing deadline will be moved to July 15, 2020 from April 15, 2020, because of COVID-19.

Treasury Department Secretary Steven Mnuchin announced on Twitter, “we are moving Tax Day from April 15 to July 15. All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.”

Previously, the U.S. Treasury Department and the IRS had announced that taxpayers could defer making income tax payments for 2019 and estimated income tax payments for 2020 due April 15 (up to certain amounts) until July 15, 2020. Later, the federal government stated that you also don’t have to file a return by April 15.

Of course, if you’re due a tax refund, you probably want to file as soon as possible so you can receive the refund money. And you can still get an automatic filing extension, to October 15, by filing IRS Form 4868. Contact us with any questions you have about filing your return.

Any amount can be deferred

In Notice 2020-18, the IRS stated: “There is no limitation on the amount of the payment that may be postponed.” (Previously, the IRS had announced dollar limits on the tax deferrals but then made a new announcement on March 21 that taxpayers can postpone payments “regardless of the amount owed.”)

In Notice 2020-18, the due date is postponed only for federal income tax payments for 2019 normally due on April 15, 2020 and federal estimated income tax payments (including estimated payments on self-employment income) due on April 15, 2020 for the 2020 tax year.

As of this writing, the IRS hasn’t provided a payment extension for the payment or deposit of other types of federal tax (including payroll taxes and excise taxes).

Contact us

This only outlines the basics of the federal tax relief available at the time this was written. New details are coming out daily. Be aware that many states have also announced tax relief related to COVID-19. And Congress is working on more legislation that will provide additional relief, including sending checks to people under a certain income threshold and providing relief to various industries and small businesses.

We’ll keep you updated. In the meantime, contact us with any questions you have about your situation.

© 2020

On March 18, 2020, President Trump signed the Families First Coronavirus Response Act. The new law contains expanded benefits under FMLA, expansion of required paid sick days and expanded unemployment benefits.  Additionally, several tax credit provisions will assist employers who provide paid leave for their employees who miss work for various coronavirus related reasons. The Act will take effect on April 2, 2020.

 Expansion of FMLA and related payroll tax credits

The Act expands the Family and Medical Leave Act (FMLA) to cover public health emergencies related to the coronavirus.  FMLA is expanded to include employees unable to work or telework due to a need to care for a child under age 18 because of a school or day care closure or childcare is unavailable due to the current public health emergency.

The Act applies to employers with fewer than 500 employees and public agencies, although exemptions may be provided for employers with less than 50 employees. Regulations will be issued regarding the exemption of companies with fewer than 50 employees, and we will share those details when they are made known. 

• Shortens the eligibility requirement from 12 months to 30 days; and
• Permits eligible employees to take up to 12 weeks of job-protected leave under the FMLA if the employee is not able to work due to the need to care for a dependent under age 18 due to school or day care closure.
• Employees may elect to take the first 10 days of leave as unpaid or use accrued vacation, personal, medical or sick leave.
• After 10 days, employees must be paid a benefit in the amount of not less than two-thirds of the regular pay. The benefit is capped at $200 per day and a maximum of $10,000 per employee.

Employer tax credits for providing FMLA benefits

• An employer that pays qualified family leave wages will get a payroll tax credit of 100% of the eligible wages paid during the period beginning April 2, 2020, through December 31, 2020.
• Applied against the employer portion of the payroll taxes.
• Credit available for up to $200 in wages per day up to a maximum of $10,000 in wages per employee.
• No tax deduction will be allowed for payroll taxes offset by this credit.
• Self-employed individuals would be eligible for a refundable income tax credit for equivalent leave amounts.

Expansion of paid sick leave

The Act requires employers with fewer than 500 employees to provide up to 80 hours of paid sick time through the end of 2020 if the employee is unable to work due to being quarantined, self-quarantined, has contracted the coronavirus, or is caring for a person that is quarantined or has the coronavirus, or caring for a child whose school or daycare is closed. This is regardless of how long the employee has been employed by the employer.

• There may be an exemption for employers with fewer than 50 employees. Regulations will be issued regarding the exemption of companies with fewer than 50 employees, and we will share those details when they are made known. 
• Employers paying benefits under this provision will be allowed a payroll tax credit as follows:

• • Up to $511 per day in wages for a worker that is quarantined or self-quarantined or has contracted the coronavirus;
  • Up to $200 per day in wages for an employee caring for a child or another individual that is quarantined or contracted the virus;
  • The credit is available for up to 10 days per calendar quarter.

Self-employed individuals: The bill also provides eligible self-employed taxpayers with a refundable credit against income tax for qualified sick leave equivalent amounts.

Notices

Employers must post a notice of the requirements described in this Act in conspicuous places where notices to employees are customarily posted. The Department of Labor is to publish a model notice within seven days of enactment.

If you have questions, please contact your Yeo & Yeo professional.

The coronavirus (COVID-19) outbreak — officially a pandemic as of March 11 — has rightly become the focus of massive public attention in recent weeks. Vice President Mike Pence has been charged with leading the U.S. government’s response to the outbreak.

On March 10, the White House met with executives of major private health insurance companies. Pence said that the companies had agreed to cover telemedicine for patients for any reason for the next few months — no matter the reason for seeking medical treatment. The insurance representatives attending the meeting also agreed to cover COVID-19 treatment and waive copayment fees for COVID-19 testing.

On March 17 at a White House press conference, it was announced that Medicare would now be offering a wide range of services via telemedicine.

These measures are intended to keep sick and at-risk patients at home, encourage testing for COVID-19, make treatment more affordable, and potentially reduce the severity and duration of the outbreak. Pence said the companies gathered represent almost 240 million Americans.

Contact your insurance provider for the details of your plan’s coverage. In the case of Medicare, contact your doctor for information. And visit the CDC website for the latest developments on the COVID-19 outbreak.

Many years ago, telemedicine essentially consisted of interaction between doctors in large hospitals and patients in remote rural clinics via closed-circuit TV. Since then, it has exploded into a far more sophisticated, venture capital-fueled industry. Multiple technologies now equip health care providers with immediate clinical data that can assist them with rapid diagnoses and patient monitoring. Also, patients can communicate directly and promptly with physicians, nurses and other health care professionals, using an expanding array of mobile apps.

A survey by national telemedicine service providers projects that in 2020 around 90% of midsized and larger employers will make telemedicine available to employees. These services may be available through health plans that serve smaller employers, as well as from vendors that operate on a standalone basis as a supplement to a standard health plan. 

4 Categories

There are four categories of telemedicine services: 

1. Synchronous.This category consists of live interactive visits between patients and health care providers, and consultations between primary care physicians and specialists with efficient data sharing.
2. Asynchronous.Also known as “store and forward,” this category involves the collection of health data, such as lab results accompanied by patient demographic data and medical history. Data from the patient is subsequently reviewed by the provider and addressed. Also, patients can leave voice or video-based messages for providers directly in an asynchronous system.
3. Remote patient monitoring.Personal health data is collected as needed, often by devices patients can operate themselves. Then the data can be transmitted to health care professionals using the patient’s phone.
4. mHealth.This is telemedicine via smartphones. In addition to virtual visits with health care providers, mHealth includes care delivery using mobile apps without the direct presence of a provider. 

Avoided ER Visits

It’s common for patients to turn to virtual care services instead of making an expensive dash to the emergency room. In 2018, four emergency room physicians, whose Philadelphia hospital offers an on-demand telemedicine service, conducted a study that was published in the American Journal of Emergency Medicine, May 2019. The research concluded: “The majority of health concerns could be resolved in a single consultation and new utilization [that is, follow-up calls from patients] was infrequent. Synchronous audio-video telemedicine consults resulted in short-term cost savings by diverting patients from more expensive care settings.”

According to the health plan at the University of Pittsburgh Medical Center, a typical acute care telemedicine “visit” costs less than $50, compared to an average $77 for a retail clinic, $112 for a doctor’s office, $156 for an urgent care clinic and $1,454 for an emergency room visit. 

Also, telemedicine services have been shown to help patients with chronic conditions like diabetes and pre-diabetes. Specifically, telemedicine is helping change patients’ behaviors through virtual support groups and among other remote interactions.

Utilization Tips

Telemedicine shows promise in generating better patient outcomes and less expensive care. But the trick for employers is to overcome employees’ reluctance about using it. The keys are effectively communicating the benefits and not putting unnecessary financial obstacles in their path.

A large provider of virtual healthcare services recommends the following do’s and don’ts to maximize utilization: 

• Do customize your communication to employees about their telemedicine benefits and send messages on a regular basis.

• Don’t charge employees out-of-pocket fees for virtual visits. You’ll come out ahead financially by maximizing employee utilization of the service.

• Don’t rule out the telephone as an option for patients to receive telemedicine services. Many people still prefer using a telephone to mobile apps.

• Do use “trained patient experience agents” to contact employees to obtain their background medical information prior to employees’ initial use of the service. Employees might balk having to supply their health data when they’re not yet seeking medical services, but it’s essential for health care providers to have this information ready when an employee calls in.

Questions to Ask Vendors

The market for telemedicine services is highly competitive. So, it’s important to know the right questions to ask when talking to vendors and to put their claims into context. 

For example, the average utilization rate of telemedicine services typically falls below 10%. Yet you probably won’t get a lot of bang for your buck with a virtual care provider unless utilization rates are in the 25% range. Utilization rates reflect on the quality of the vendor’s platform and your employees’ health. 

When comparing vendors’ prices, look at the whole picture. A vendor might set one fee low but offset the low fee by charging more.

When costs are primarily based on the PEPM fee, you’ll have a better handle on what to expect than when there are hidden or variable costs. Equally important, a vendor who bases charges on the PEPM fee has an incentive to address your employees’ health needs with fewer virtual visits.

Right for Your Business?

There are no silver bullets available to slay the beast of ever-rising health benefit costs. But as it evolves and improves, telemedicine is equipped to do it some damage. Contact your HR or financial advisor to help evaluate your options to fortify your defenses.

As we continue to monitor reports of the impact of the Coronavirus (COVID-19), we want to assure you that Yeo & Yeo remains committed to delivering outstanding business solutions.

During this evolving health situation, the safety and well-being of our team members, clients, and families is our main priority. We greatly care about our communities and want to do our part to keep you healthy, keep our employees healthy and help minimize the spread of the virus. In that spirit, we are implementing more aggressive components of our Business Continuity Plan to assist in the containment of the coronavirus and help protect us all.

For our Yeo & Yeo CPA and Medical Billing Clients:

All Yeo & Yeo offices are closed to outside visitors through April 17. We encourage clients to use other means available to communicate and send information at this time.

• Our professionals are available via email, phone, online meetings and video conferencing to continue to serve you.
• We highly encourage you to use our client-friendly portals for the safe and secure transfer of information. Note, there is a setup period for new users that can take up to one business day at this time.
• You may mail documents to our offices but, again, consider using our portals.
• If the above methods are not an option for you, the drop-off of documents is allowable currently as a last resort. Please use the dropbox or slot where available/possible; otherwise, a drop-off area is established in each office to minimize contact for you and our professionals.
• There will be no signing of documents on-site. Your Yeo & Yeo professional will electronically send documents for signature or mail required documents.
• At this time, the government has not issued an extended tax deadline and, while our tax professionals will continue to be as timely as possible, please understand the circumstances we are all faced with may slightly delay the turnaround on tax returns while meeting the current tax deadline. We are monitoring and watching for further details and will communicate any changes that are announced regarding notice of a tax-filing extension.

All nonessential client visits are suspended through April 17. We feel that for you, your team’s and our professionals’ safety, it is best that we delay on-site visits/work at this time. 

• Your Yeo & Yeo professional will help coordinate the handling of the needed documentation to maintain workflow as best as possible. For the transfer of documents, again, we highly encourage you to utilize our client portals.

 For our Yeo & Yeo Technology Clients:

YYTECH’s office is closed to outside visitors through April 17, except for equipment drop-off/pickup.

• Our professionals are available via email, phone, online meetings and video conferencing to continue to serve you.
• The drop-off and pickup of equipment are accepted at this time with safety measures in place to sanitize all incoming and outgoing equipment.

Nonessential on-site client visits are minimized through April 17. We feel that for you, your team’s and our professionals’ safety, it is best that we reduce on-site visits/work at this time.

• Our IT professionals will make every attempt to perform service remotely when possible as a first resort.
• We will continue to perform on-site support and maintenance provided the client and technician are comfortable with in-person contact, though again, let’s work to minimize where possible.
• Our IT professionals will follow safety measures when on-site that will include the use of sanitizing equipment and wearing protective gloves with disposal of the gloves on-site.
• Our professionals have been given the right to leave an off-site location if they feel their health is being compromised and, likewise, you may ask them to leave if you or your employees feel uncomfortable in any way.

 Other Steps Being Implemented Firmwide

Other steps we are taking to help prevent the spread of the virus include minimizing the number of team members in our offices. Several of our professionals will primarily work remotely from home during this time, while others are working alternate hours, creating social distancing for those in the office. This is not new to us; Yeo & Yeo has embraced remote and flexible schedules for years. Our information security systems ensure that our clients’ information will remain secure, even when we are working remotely. All team members are directed to stay home if they or a family member are sick. Further measures are in place should a team or family member be exposed or contract the virus.

These steps are necessary to preserve the health of our team and help curtail the spread of the virus while upholding our commitment to you, our clients. As we continue to monitor the impact of the coronavirus, we will keep you informed of further changes, including possible date changes of the above measures.

For ongoing reference, Yeo & Yeo has created a dedicated COVID-19 Resource Page on our website with information and resources to help navigate this situation. We will update it regularly as new information develops.

On behalf of all of us at Yeo & Yeo, thank you for your understanding and support during this challenging time. Remember, we are all in this public health situation together. We wish you, your families and your teams much good health.

Gov. Gretchen Whitmer has signed Executive Order 2020-10 temporarily expanding eligibility for unemployment benefits effective immediately, and until Tuesday, April 14, at 11:59 p.m. 

Under the order, unemployment benefits would be extended to the following:

• Workers who have an unanticipated family care responsibility, including those who have childcare responsibilities due to school closures, or those who are forced to care for loved ones who become ill.
• Workers who are sick, quarantined, or immunocompromised and who do not have access to paid family and medical leave or are laid off.
• First responders in the public health community who become ill or are quarantined due to exposure to COVID-19.

The State is also seeking solutions for self-employed workers and independent contractors who traditionally do not have access to unemployment insurance. 

Access to benefits for unemployed workers will also be extended: 

• Benefits will be increased from 20 to 26 weeks. 
• The application eligibility period will be increased from 14 to 28 days.  
• The normal in-person registration and work search requirements will be suspended.  

Eligible employees should apply for unemployment benefits online at www.michigan.gov/UIA or 1-866-500-0017. A factsheet on how to apply for benefits can be found here.  

This response came following the Governor signing an order earlier today suspending the operations of all restaurants and bars, theaters, casinos, and other public spaces in the state of Michigan to help mitigate the novel coronavirus pandemic. The order will go into effect at 3 p.m. on Monday, March 16, and is in effect through March 30.

The order states that it applies to:

• Restaurants, cafes, coffee houses, bars, taverns, brewpubs, distilleries and clubs
  • Restaurants may allow five customers inside at a time to pick up orders, so long as they stay six feet apart from each other, according to the order.
• Movie theaters, indoor and outdoor performance venues
• Gymnasiums, fitness centers, recreation centers, indoor sports facilities, indoor exercise facilities, exercise studios and spas
• Casinos

The order states that it does not apply to:

• Office buildings
• Grocery stores, markets and food pantries
• Pharmacies, drug stores, providers of medical equipment and supplies, health care facilities and residential care facilities
• Juvenile justice facilities
• Warehouse and distribution centers, and industrial and manufacturing facilities

To stay informed of the most recent Executive Orders and for other business and individual resources available from the State, please refer to the State of Michigan’s dedicated Coronavirus site at www.michigan.gov/coronavirus.

Questions from employers and employees about coronavirus (COVID-19) pandemic are multiplying almost as fast as the virus itself. Employers need to rely on a combination of authoritative legal and medical advice, and their own common sense, to keep employees safe.

Guidance issued almost daily from the Centers for Disease Control (CDC), the U.S. Department of Labor’s Occupational Health and Safety Administration (OSHA) and other sources, reveal the wide scope of employment issues caused by the pandemic.

A good place to start to understand an employer’s basic legal obligations is found in the Occupational Health and Safety Act. Employers are obligated, the law states, to “furnish to each of his employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees.”

“Recognized Hazards”

The word “recognized” plays a key role in the current situation. On a webpage dedicated to COVID-19, OSHA points out that its standards, including those dealing with personal protective equipment and respiratory protection, “require employers to assess the hazards to which their workers may be exposed.”

Hazard levels vary from one employer to the next, as well as for different jobs that your employees perform. However, if most of your employees work in relatively close proximity to each other, it wouldn’t matter much that some deal more directly with the public and some stay in the back office, because there’s a risk that one employee will spread the virus to another. That means that your hazard assessment must include the danger that your employees pose to each other.

OSHA has placed jobs and workplaces into four COVID-19 exposure risk categories, ranging from “very high” to “lower.” As you’d expect, the highest risk categories are for jobs such as health care providers who come into regular contact with people who have, or are suspected of having, been infected.

Employees under “medium” exposure risk are those “with high-frequency contact with the general population,” such as in a retail sales environment. The “lower” risk category involves “employees who have minimal occupational contact with the general public and other coworkers, such as office employees.”

Appoint a COVID-19 Czar

How specifically should you be responding to the COVID-19 pandemic? Before diving into the sanitary and legal matters, establish an organizational structure fit to meet the challenge. Appoint a COVID-19 response czar.

In addition to determining and taking the necessary steps to assess and mitigate the risks and address problems that arise, your COVID czar needs to be your point person in communicating with employees. Workers at all levels of your organization need consistent direction and responses to their questions. Ideally the czar will anticipate questions and answer them proactively.

The easiest questions to address are how employees can minimize their chances of becoming infected (washing their hands frequently, etc.). But it’s important to be sure that the resources (for example, soap) are on hand for them to follow those directions, as well as sufficient custodial services to keep the workplace as virus-free as possible.

It’s not too soon to make policy decisions about arranging for telework, eliminating non-essential travel, extending paid leave benefits, and a host of other issues that may arise, if a COVID-19 outbreak occurs in your area. The key is striking the right balance between possibly erring miles too far on the side of caution (thereby undermining your operational capacity) and putting employees at risk.

Use Facts, Shun Rumors

Grounding your policy decisions in reliable threat assessments by respected organizations such as the Centers for Disease Control (and not the most alarm-generating local news stories) is the way to go. It’s also important for employees to understand the basis upon which you’re making decisions affecting their jobs, pay, and health.

Click here for some advice from the CDC on what businesses and employers can do now:

Sound legal advice is critical since a host of labor laws and regulations come into play, including the Equal Employment Opportunity Act, the Fair Labor Standards Act, the Americans With Disabilities Act, the Family and Medical Leave Act, and HIPAA. Labor law firms are busy dispensing guidance on many COVID-19 related questions.

Here are a few Q&As to give you a sense of current concerns — but contact your own employment attorney or HR advisor for complete guidance appropriate to your unique circumstances:

HR Question Sampler

Q: One of my employees has tested positive for COVID-19. Now what?

A: Not only should you keep that employee away from work but you should send other employees who worked closely with the infected employee home and ask them to stay away for two weeks. That’s the amount of time needed to determine whether they were infected, as symptoms can take that long to manifest.

Q: Would an infected employee, who is likely to have been infected at work, qualify to make a Workers Comp claim?

A: Probably not, since getting the infection was not caused by a hazard specific to the employee’s job, like being contaminated by a toxic chemical used in connection with that specific job.

Q: Is an individual affected by COVID-19 eligible to receive unemployment compensation (UC)?

A: Maybe. The U.S. Department of Labor (DOL) issued guidance on this situation. The DOL has stated that the unemployment Insurance program requires individuals to be able and available for work and to actively seek work. However, states have significant flexibility in implementing these requirements, as well as in determining the type of work that may be suitable given the individual’s circumstances. What this means is an individual may be quarantined or otherwise affected by COVID-19 but still eligible for UC, depending on state law. For more information: https://wdr.doleta.gov/directives/attach/UIPL/UIPL_10-20_Acc.pdf

Q: One of my employees just returned from a trip to a place where many people have been infected by COVID-19. Can I require the employee to be tested?

A: Ordinarily you can’t intrude into an employee’s health issues. However, if you can show that the test you’re requesting is job-related and you have reason to believe the employee could pose a direct threat to coworkers, you’re probably within your rights to make that request. Consult with an employment attorney.

For more information about COVID-19 in the workplace, OSHA has issued this publication: https://www.osha.gov/Publications/OSHA3990.pdf

President Trump announced that the April 15 tax filing and tax paying deadline will be extended for “certain” taxpayers due to the coronavirus (COVID-19). Trump announced the extension in an address to the nation on March 11.

Earlier that day, Treasury Sec. Steven Mnuchin said the payment delay would put more than $200 billion into the economy that would have gone into paying taxes in April. Trump and Mnuchin didn’t specify what the new deadline will be, or which taxpayers will get an extension. We’ll keep you updated.

Congress is also working on a package of economic stimulus and other provisions to help individuals and businesses cope with the virus.

High Deductible Health Plans and COVID-19 Costs
The IRS also issued Notice 2020-15 on March 11. The guidance allows high-deductible health plans (HDHPs) to pay for COVID-19-related testing and treatment, without jeopardizing their status. This also means that an individual with an HDHP that covers these costs may continue to contribute to a Health Savings Account.

According to the guidance, an HDHP won’t lose its HDHP status if it pays, without applying the minimum deductible or any cost sharing, for a plan participant’s testing for and treatment of COVID-19. However, the notice doesn’t require HDHPs to provide testing and treatment services without a deductible or cost sharing. It only provides that an HDHP may provide such benefits without losing its HDHP status.

The notice also doesn’t modify previous guidance regarding the requirements to be an HDHP other than with respect to testing for and treatment of COVID-19. As in the past, any vaccination costs continue to count as preventive care and can be paid for by an HDHP.

HDHP plan participants should consult their health plans to determine any health benefits for testing for and treatment of COVID-19 provided by their plans, including the potential application of any deductible or cost-sharing

Yeo & Yeo’s top priority is to deliver outstanding business solutions to our clients. During this time of challenge over the situation with the coronavirus (COVID-19), our commitment to the health and well-being of our clients, our team members, family members and community is of our highest regard.

At this time, we are fortunate to have had no confirmed cases or known encounters among any of our team members — and hope that you, your families and team members will continue to stay healthy too. At the onset of this outbreak, we put in place extra measures to ensure the health and safety of our staff and visitors and will continue to do so. We’ve encouraged every Yeo & Yeo team member to stay home if sick and to contact our HR representative if they or anyone in their household experiences symptoms or are diagnosed with or exposed to the coronavirus. Yeo & Yeo has supported flexible work practices with technology that enables remote access as well as alternate work schedules to accommodate our team members and their situations.

With that, to continue to serve our clients, it is business as usual at this time. If you feel uncomfortable with coming into any of our offices, are considered at-risk or vulnerable, or present any symptoms, we would like to remind you that we have the tools and resources necessary (via portals, email, etc.) by which you can send us  information needed without coming into the office. And, if you have meetings scheduled with anyone on our team, and you would prefer to speak by phone or video chat, that option is available as well.

Yeo & Yeo has a robust plan in place for continuing operations in the coming months. We are confident in our ability to provide essential services without interruption while ensuring our employees remain healthy and safe. 

In a matter of just 24 hours, we have seen unthinkable measures to protect our great nation from a massive outbreak. By the time you read this, it’s likely more will have developed. We are closely monitoring our federal, state, and local government updates. We are committed to serving you with as little disruption to our services as possible.

On behalf of all of us at Yeo & Yeo, thank you for your understanding and support during this health challenge. If you have any questions or concerns, please do not hesitate to contact us.

Stay safe. Stay healthy!

Longer life expectancies and rising health care costs make saving for retirement more important than ever before. A Health Savings Account (HSA) can be a powerful tool for financing health care expenses while supplementing your other retirement savings vehicles. And it offers estate planning benefits to boot.

What’s an HSA?

An HSA is a tax-advantaged savings account funded with pretax dollars. Funds can be withdrawn tax-free to pay for a wide range of qualified medical expenses. (Withdrawals for nonqualified expenses are taxable and, if you’re under 65, subject to penalties.)

To provide these benefits, an HSA must be coupled with a high-deductible health plan (HDHP). For 2020, an HDHP is a plan with a minimum deductible of $1,400 ($2,800 for family coverage) and maximum out-of-pocket expenses of $6,900 ($13,800 for family coverage). In addition, you must not be enrolled in Medicare or covered by any non-HDHP insurance (a spouse’s plan, for example). Once you enroll in Medicare, you can no longer contribute to an HSA, but you can continue to withdraw funds from your account to pay for qualified expenses.

Currently, the annual contribution limit for HSAs is $3,550 for individuals with self-only coverage and $7,100 for individuals with family coverage. If you’re 55 or older, you can add another $1,000. Typically, contributions are made by individuals, but some employers contribute to employees’ accounts.

HSAs can lower health care costs in two ways: by reducing your insurance expenses (HDHP premiums are substantially lower than those of other plans) and allowing you to pay qualified expenses with pretax dollars.

In addition, any funds remaining in an HSA may be carried over from year to year, continuing to grow on a tax-deferred basis indefinitely. And, to the extent that HSA funds aren’t used to pay for qualified medical expenses, they behave much like an IRA or a 401(k) plan.

What are the estate planning benefits?

The estate tax implications of inheriting an HSA differ substantially depending on who receives it, so it’s important to consider your beneficiary designation(s). If you name your spouse as beneficiary, the inherited HSA will be treated as his or her own HSA. That means your spouse can allow the account to continue growing and withdraw funds tax-free for his or her own qualified medical expenses.

If you name your child or someone else other than your spouse as beneficiary, the HSA terminates and your beneficiary is taxed on the account’s fair market value. It’s possible to designate your estate as beneficiary, but in most cases that’s not the best choice, because a beneficiary other than your estate can avoid taxes on qualified medical expenses paid with HSA funds within one year after death.

A flexible tool

An HSA is a flexible tool that can be used to reduce health care costs, supplement your retirement savings, provide additional wealth for your heirs — or all three. Contact us for additional details.

© 2020

The Michigan School Business Officials Annual Conference will be held at the DeVos Place in Grand Rapids, April 21-23. Members of Yeo & Yeo’s Education Services Group will present three of the sessions. We welcome you to join us to gain new insights into managing your Michigan school.

PTO and Booster Groups: On or Off the District’s Books?
– Jennifer Watkins, CPA

Get answers to common questions about booster and Parent Teacher Organizations (PTO) groups’ financial reporting and how your district’s involvement impacts your GASB 84 reporting requirements.

The ABCs of Federal Program Compliance and Accounting Along with Preparing for Your Audit
– Kristi Krafft-Bellsky, CPA

Learn everything you need to have in place for a successful federal program audit, which includes examples of policies and procedures to meet the federal requirements. Understand how to prepare your Schedule of Expenditures of Federal Awards (SEFA) and prepare for your audit (including single audit). Get examples of necessary documents and common findings.

IT Vendor Fraud
– Taylor Diener, CPA

Technology directors work with many vendors to secure the equipment and services for their district. Sometimes they are put in unexpected situations with vendors that may make it easy to fall into a fraud trap. Understand Information Technology (IT) vendor fraud and ways to mitigate those risks through necessary controls.

We encourage you to attend. Register and learn more about the MSBO Annual Conference.

Today, almost everything your nonprofit does is accumulated within information technology, computers. There is personally identifiable information related to your donors, employees, and customers. Processes and plans that give your nonprofit a strategic advantage are stored within IT. Documentation of compliance with grants and laws is also stored within IT.

Knowing how much of your nonprofit’s vital information is held on computers, having internal controls over information technology is just as important as having internal controls over cash. IT controls need to cover both accidental loss of information, such as a crashed hard drive, and purposeful theft of information, such as ransomware attacks. Controls should cover the following areas:

1. Access to the computers, both physical and virtual, including how it is granted and removed
2. Limiting access to information to only what is applicable for a person’s job; this means different people have different access
3. Training on information technology security; people are the weakest link in IT security
4. Strong passwords, multi-factor authentication, and policies to prevent sharing them
5. Software updates, including antivirus
6. Spam filtering
7. Cyber insurance
8. Evaluating service organization controls (third parties you rely on to accumulate, store, or analyze your data)
9. Backups, including testing
10. Compliance with laws, especially those regarding personally identifiable information

There are many different information technology controls to implement, and above are just a few. Consider which pieces of your information technology your nonprofit couldn’t survive without, and how to ensure continuity of that information.

Government entities in Michigan face numerous compliance requirements. Does your government ever have trouble keeping up with the filing requirements? Below we will highlight the commonly missed requirements to improve state compliance and are often are identified during the annual audit, or some your government should consider for future implementation. This list is not all-inclusive but is intended to be a refresher on several typical compliance requirements.

Tax Increment Financing Annual Reporting
Public Act 57 of 2018 set forth new reporting requirements for tax increment financing plans. Not only were new annual reports required by this act, but it also presented specific requirements about what must be available on the government’s website. The website must include items such as meeting minutes, annual budgets and audits, the tax increment financing plan and development plan and other information. Many other items must be made publicly available as well.

Although a website posting is encouraged, your government may forgo that option and make physical copies of the required documents available in a public area at your office. The tax increment financing annual financial report form is due 180 days after your fiscal year-end.

To learn more about the Tax Increment Financing Act and other applicable items, we encourage you to visit the following websites:

Michigan Department of Treasury – Tax Increment Financing Act
Michigan Legislature – Tax Increment Financing Act

Tax Collections for Other Taxing Units
If your government collects taxes for other taxing units, you must remit those taxes on time. The standard deadline is within 10 business days after the first and the fifteenth day of each month. Therefore, all collections on hand as of the first and fifteenth must be disbursed within 10 business days. If your government finds this to be a challenge or currently has a different schedule, hope is not lost! The State can make an exception if there is a payment arrangement agreement with the taxing authority. For example, imagine your government collects taxes on behalf of a school district, and you remit those taxes monthly. That is allowable, so long as there is an agreement. We suggest these agreements be written and signed by the individuals with the appropriate authority.

Further information is available on the Michigan Legislature website:

Michigan Legislature – General Property Tax Act

Electronic Transactions of Public Funds
Most governments today utilize some form of electronic fund transfers (EFTs) to make payments to their vendors. EFTs can be an excellent way to create efficiencies in the payables department; however, certain compliance requirements and controls must be in place before a government begins to make such disbursements. Public Act 738 of 2002 requires that the governing body adopt, by resolution, the authority of an individual to use electronic transactions. Also, this individual must present to the governing body an Automated Clearing House (ACH) policy that outlines the following:

1. Who is responsible for ACH agreements.
2. Who is responsible for disbursing the funds.
3. How will that information be made available to the local unit.
4. What internal controls will be used to monitor ACH payments.

Further information is available on the Michigan Legislature website:

Michigan Legislature – Electronic Transactions of Public Funds

Credit Card Compliance
For many governments, the use of credit cards is a controversial issue. Concerns often arise over what internal controls are necessary to ensure that use is appropriate for public funds. Public Act 266 of 1995 recognized the need for policies related to this specific issue and outlines what a Michigan government must do to use credit cards for purchases. The act outlines that the governing body must adopt a written policy by board resolution that describes what the responsibilities and internal controls shall be. If your government currently uses credit cards for purchases, be sure to have a written policy adopted by board resolution.

Detailed information about the requirements of this policy are available at the following link:

Michigan Legislature – Credit Card Transactions

In addition to purchases with credit cards, your government may accept credit cards as a method of payment for taxes, assessments or other fees. The State of Michigan, under Public Act 280 of 1995, also requires a formal resolution by the governing body to accept such payments.

Detailed information about the requirements of this policy are available at the following link:

Michigan Legislature – Financial Transaction Device Payments

The items above are a short list of some of the compliance requirements that governments commonly miss. If you believe your government has failed to file any of the annual reports or does not have resolutions as required by the State of Michigan – or if you believe your policies and procedures could use a tune-up – we encourage you to reach out to your Yeo & Yeo CPA for assistance.