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COVID-19 and its Affects on the Self-Employed

According to research from the US Small Business Administration, our country has 28.8 million small businesses that employ 56.8 million employees. Altogether, small business owners account for 99.7% of all employers nationwide.

Amid the COVID-19 outbreak, small business owners and self-employed individuals across the country are wondering how the pandemic will affect their healthcare.

Fortunately, assistance and access to an abundance of resources are on the way. In this post, you’ll find out everything you need to know about employee and self-employed healthcare changes during these uncertain times.

Steps for Small Business Owners
Companies that have already initiated quarantine measures may be wondering what steps to take next. Others are still operating, but want to keep their workforce healthy. Many business owners are already experiencing the effects of COVID-19, including decreased cash flow and future financial impacts.

However, federal and state governments are rolling out several relief programs to provide emergency funds during this time. First, small business owners need to ensure employee health and safety. Next, locate the appropriate resources and establish a strategy for the worst-case scenario. Stay informed on current legislation updates that could assist small business owners and their employees.

Step 1: Establish Employee Safety Protocol
Prevention is the best way to cure a disease. In response, many businesses have initiated work-from-home programs to help prevent the spread of disease. However, if your company is still operating at its physical location, there are steps you can take to ensure employee safety.
 - Encourage sick employees to stay home
 - Emphasize regular hand washing and disinfection
 - Follow mitigation strategies
 - 
Practice social distancing
 - Conduct emergency planning exercises
 - 
Work with state and local health departments

You can learn more about preparing your workplace for a COVID-19 outbreak from the Center for Disease Control.

Step 2: Find Small Business Disaster Assistance Programs
Small business owners can look to the following assistance and relief programs to help navigate the challenges presented by the Coronavirus.
 - Small Business Administration Resource Page — The organization helps small businesses access federal assistance and working capital loans. Also, employers will find an abundance of resources and strategies for overcoming potential issues. You may qualify for Disaster Loan Assistance.
 - IRS and Treasury Department — Federal tax deadlines will have a three-month extension in 2020 for owed payments up to $1 million. Business owners must still file their taxes by April 15th. However, payments will be delayed, without penalties, until July 15th.
 - National Governor’s Association — Small businesses may be eligible for state and city-specific relief programs, such as interest-free loans.
 
These resources can help your small business stay afloat during the pandemic and pay out-of-pocket costs resulting from paid family or medical leave mandates.

Step 3: Stay Up-to-Date on Healthcare Legislation
Legislative measures are protecting small business employees affected by the Coronavirus. The following legislation will take effect starting April 2nd, 2020. These temporary changes will be active until December 31st, 2020.

Coronavirus Aid, Relief, and Economic Security (CARES) Act
The CARES Act includes provisions for the following relief efforts.

 - Forgivable payroll loans for small businesses
 - Direct cash payments for Americans
 - Waiver of unemployment benefits waiting period
 - Expansion of unemployment insurance
 - Relief for hard-hit segments

The legislation is providing $2 trillion of aid for those affected.

Family First Coronavirus Response Act
The act establishes emergency paid sick and family leave, free Coronavirus testing, increased unemployment benefits, and expanded food assistance programs.

 - Private companies with up to 500 employees must provide workers with 2–12 weeks of sick pay. The first two weeks of leave pay are equal to the employee’s regular salary. For subsequent weeks, employees will be paid two-thirds of their original salary. The federal government will reimburse business owners within three months through tax credits.
 - Private employers with less than 500 employees must provide paid leave for workers who must care for their children who cannot attend school because of the pandemic.
 - The first ten days of leave may be unpaid, and employers cannot force workers to take other types of paid leave during this time.
 - Employers with less than 50 employees may request an exemption if they can provide sufficient cause.
 - Companies with under 25 employees are NOT required to return employees to their jobs after the pandemic, if, as a result, the position no longer exists.

These requirements only apply to employees who have been working at a company for at least 30 days.

Emergency Paid Sick Leave Act
As part of the Family First Coronavirus Response Act, private employers with less than 500 employees must offer two weeks of paid sick leave to workers under the following circumstances.

 - The employee is in quarantine under COVID-19 orders
 - The employee is showing symptoms and is waiting for a diagnosis
 - The employee is following instructions from their health care provider to stay home.
 - The employee is providing childcare because of school closures
 - The employee is caring for someone in quarantine.

In contrast to Emergency FMLA, there is no minimum employment period to receive benefits. However, small business owners with under 50 employees may request an exemption. The limit for all types of paid sick leave is $511 per day, or a maximum of $5,110 at full pay.

Small Business Health Insurance
If a small business employee becomes infected with Coronavirus, the Essential Health Benefits under Small Business Health Insurance will cover expenses such as the following.

 - Testing and medical necessities
 - Doctor visits
 - Lab work
 - Hospitalizations
 - Support services

Deductibles, copays, coinsurance, and other out-of-pocket costs vary by insurer. Many small business owners and their employees will have to pay these expenses before reimbursement.

Guidelines for the Self-Employed
The new legislation also includes stipulations for self-employed individuals, freelancers, and contract workers. Those who are self-employed and unable to work due to COVID-19 may be eligible for up to 10 days of full paid leave in tax credits.

Tax Credits and COVID-19
Self-employed individuals qualify for tax credits during the pandemic under the following circumstances.

 - The individual is in quarantine due to state orders.
 - The individual is in quarantine according to the advice of a healthcare professional.
 - The individual is showing symptoms and is awaiting diagnosis.

Those who are eligible will receive their full average salary for the first ten days at a daily maximum of $511 for a total of $5,110.

Self-employed workers may receive ten days tax credits equal to two-thirds of their average wages at a maximum of $200 per day, or a maximum of $2,000, under the following circumstances.

 - The individual is caring for someone in quarantine.
 - The individual is caring for their child during school closures.
 - The individual is experiencing a similar situation related to COVID-19.

Those who are self-employed should keep copies of any quarantine or isolation orders. Additionally, keep track of any records showing your salary throughout the year. Determine your average pay by dividing your net earnings for the whole tax year by 260.

Medicare Coverage and COVID-19
Medicare offers services and coverage to assist during the outbreak.

 - Medicare covers all COVID-19 lab test costs. There are no out-of-pocket expenses.
 - If a vaccine becomes available, it will be covered under part D of Medicare Prescription Drug Plans.
 - Medicare covers Coronavirus hospitalizations.
 - Those with a Medicare Advantage Plan will have access to the same benefits.
 - Expanded availability of Telehealth services. Medicare covers the costs of virtual check-ins.

Individuals with Medicare tend to be at higher risk of contracting the illness due to preexisting health conditions. In response, Medicare is covering related COVID-19 expenses.

Final Thoughts
Small business owner’s COVID-19 paid-leave payments exceed payroll tax liability, an immediate refund is possible. Business owners are advised to claim these refunds on the forms issued from March 23rd, 2020. An expedited process will enable the distribution of refunds within two weeks. Eligible employers may claim credits from April 1st to December 31st, 2020. These refunds also apply to self-employed individuals who contract COVID-19 or care for another infected person. Find updates on the Coronavirus Tax Relief website.

Employers that qualify must provide employees with two weeks of paid sick leave, or a maximum of 80 hours if they are unable to work due to COVID-19-related reasons. In the following two weeks, affected employees may receive paid leave equal to two-thirds of their wages. The Emergency Family Medical Leave Act mandates paid leave for employees with at least 30 days of tenure. All other employees will have access to Emergency Paid Sick Leave.

Several solutions are already available for small business owners and self-employed individuals impacted by the pandemic. Federal and state assistance programs are helping by offering emergency loans, tax deferments, and tax credits to businesses in need.