With the arrival of COVID-19, the world as we knew it changed, and with it, some legal processes are changing as well. One new concern that people and insurance companies may need to handle differently involves the effects of Long COVID-19 and insurance claim issues related to long-term disability. While most people who have had COVID have recovered within a few weeks, some people are experiencing long-term effects and have been unable to return to work.

Currently, there are three main sources of disability insurance: (1) employer-paid disability, such as short and long-term disability and workers compensation; (2) Social Security disability insurance; and (3) individual income insurance policies. While each has its benefits, the root of the problem lies with obtaining long-term disability for people suffering with debilitating symptoms of Long COVID. For example, Social Security offers long-term disability only. To be eligible for Social Security long-term disability, the applicant must show that they cannot work in substantial gainful activity, work their normal job, or adjust to a different job because of their outstanding medical condition. They must also show that their condition is expected to last at least one year or result in death.

The problem that many applicants are having relates to how to prove they are “disabled” to meet the definition for eligibility. The list of Long COVID symptoms is lengthy and varied, ranging from severe cardiovascular issues to kidney dysfunction, and even includes symptoms like depression and anxiety. Each person has unique symptoms or a series of symptoms that affect their ability to work, which makes it difficult for doctors to predict whether those conditions will continue and when people can return to work.

Additionally, each type of long-term disability provider has a required waiting period before eligibility for long-term disability may begin. These periods also vary and may be thirty, sixty, or ninety days. With COVID-19 still being a new disease, and with no current studies available to establish how long the symptoms of Long COVID may last, it is also difficult for doctors to properly certify that patients are not able to work when the eligibility waiting period expires or that their condition is expected to last for at least one year. Doctors can easily disagree professionally as to whether or not a person’s symptoms should keep that person from being able to work.

Unfortunately, many people do not have the luxury of not working for up to three months while waiting for their disability benefits to begin, which poses an additional problem – if someone is attempting to work while waiting for benefits, that ability to make money could work against them. Another problem posed in Workers Compensation scenarios is how to prove that a patient caught COVID while at work and not outside of the office.

If you are experiencing symptoms of Long COVID that are affecting your ability to work, it is important to collect documentation before submitting your claim. First, review your insurance policy to discover how disability is defined and the eligibility requirements to identify any exclusions or limitations. Then, after you satisfy the thirty, sixty, or ninety-day waiting period, you may submit your claim with all of your documentation.

Important documentation you will need includes all of the symptoms related to your condition, as well as witness statements to support how COVID health problems have affected your ability to work. The insurance provider will also want to see your job description and medical records. Make sure that you document any verbal calls that you have with your medical provider, and always send a follow-up email to recap the conversation. In addition, try to avoid using words like “never” and “always” in your documentation and do not exaggerate or overstate your symptoms. And, of course, in this world of social media, it is equally important that your social medial postings be consistent with your condition. If an insurance company decides that you have exaggerated or lied about your medical condition, they may deny your claim entirely.

There are organizations that are seeking to help Long COVID survivors. The Long COVID Alliance and Survivor Corps are dedicated to providing education and resources for COVID-19 patients, and connecting them with medical and scientific research efforts to help with the national response. Survivor Corps may be found at www.survivorcorps.com. Body Politic is another organization that offers a COVID-19 support group for both patients and caregivers to provide emotional support, resources, community, and opportunities for advocacy. Body Politic may be found at www.wearebodypolitic.com.

Bill Hesch is a CPA, PFS (Personal Financial Specialist), and attorney licensed in Ohio and Kentucky who helps clients with their financial and estate planning. He also practices elder law, corporate law, Medicaid planning, tax law, and probate in the Greater Cincinnati and Northern Kentucky areas. His practice area includes Hamilton County, Butler County, Warren County, and Clermont County in Ohio, and Campbell County, Kenton County, and Boone County in Kentucky.

(Legal Disclaimer: Bill Hesch submits this blog to provide general information about the firm and its services. Information in this blog is not intended as legal advice, and any person receiving information on this page should not act on it without consulting professional legal counsel. While at times Bill Hesch may render an opinion, Bill Hesch does not offer legal advice through this blog. Bill Hesch does not enter into an attorney-client relationship with any online reader via online contact.)

With all that is taking place in our nation at this time, we at the William E. Hesch Law Firm, LLC are trying to emphasize the importance of executing your Financial Power of Attorney, Health Care Power of Attorney, and Living Will so that your family can manage your finances and make your health care decisions if you are disabled or incapacitated.

These three documents are often overlooked by most individuals since 50% of people die without a will. However, if you become disabled or incapacitated without these documents, then your family must go to the probate court and get appointed your guardian in order to manage any assets in your name (e.g. IRA, 401K, etc.)  or make your health care decisions.

The guardianship process is an administrative nightmare for family members, and just ends up generating hefty attorney’s fees especially in Hamilton County Ohio.  First, you have to get a guardian appointed, and then the Court sets a monthly budget and the Guardian needs to get court approval every time an extra expense not in the budget occurs.  Additionally, you must keep an annual accounting to document with a receipt every dollar you spend.  Also, it is a requirement in Hamilton County Ohio that you have an attorney co-sign on every check that you write.

The Financial Power of Attorney is a powerful document that is not costly to create, and it allows whoever you designate to access your assets in order to pay your bills and take care of your finances.  Your family member or friend who is appointed your power of attorney (POA) will be able to take this document to the bank and get listed on your account as your power of attorney. This allows the POA access to the account without court involvement.  Obviously, this is a powerful document and you would only want to designate someone you trust, but it makes things a lot easier on your family.

It is also just as important to execute the necessary health care documents. It is important to note, that in Kentucky the Health Care Power of Attorney and Living Will are combined into one document.  In Ohio, they are two separate documents. You always need a Health Care Power of Attorney, because if you became sick and temporarily unconscious or incapacitated, you would need to designate a health care POA to make medical decisions if you are unable to do so for any reason. The Health Care Power of Attorney allows whoever you designate to make those health care decisions on your behalf.

The Living Will is needed when you are either terminally ill or permanently unconscious and at least two physicians have determined that life support and a feeding tube is not going to help you get any better, rather they will simply prolong the process of dying.  In that situation by having a Living Will, you are directing your doctors that if you are terminally ill or permanently unconscious that you do not want life support or a feeding tube and you do not want your family to have to make that decision.  If you only have a Health Care Power of Attorney in Ohio, and no Living Will, then you are saying that you want your family to make all of your end of life decisions.  If you know that you don’t want life support in those situations, and you do not want your family to have to make those decisions, then you need the separate Living Will document in Ohio. In Kentucky, the section for the Living Will is included in the Health Care directive.

In practice, we have seen those instances where families only had a Health Care Power of Attorney, because they thought they would be able to make those end of life decisions for a spouse or parent and it ended up being very difficult for them.  It is important to keep this in mind when making these estate planning decisions.

Another thing to be aware of is the grey areas, which come up more often.  For example, you are not terminal or permanently unconscious, but your heart stopped.  In this situation would you want to be resuscitated using paddles, use medication to restart your heart, or would you want a DNR?  Although it may be difficult, these are conversations we advise you to have with your doctor and family members so that they know what you would want in these various situations.

(Legal Disclaimer:  Bill Hesch submits this blog to provide general information about the firm and its services.  Information in this blog is not intended as legal advice, and any person receiving information on this page should not act on it without consulting professional legal counsel.  While at times Bill Hesch may render an opinion, Bill Hesch does not offer legal advice through this blog.  Bill Hesch does not enter into an attorney-client relationship with any online reader via online contact.)

 

 

The COVID-19 pandemic has brought about many changes for businesses which include the Paycheck Protection Program loan (PPP) and the Emergency Economic Injury Disaster Loan Program (EIDL).  We have also seen the Families First Coronavirus Response Act (FFCRA) tax credits with the Employee Paid Sick Leave Act (EPSL) and the Emergency Family and Medical Leave Expansion Act (Expanded FMLA), as well as, the CARES Act Employee Retention Credit.  All of these benefits are a relief to business owners as they deal with the struggles of the Coronavirus with their employees, and their business profits.  This relief is good but can also be overwhelming and confusing.

Be aware that you cannot combine some of the options in order to get a greater benefit.  There are options to cover the many expenses but you are also limited so that you do not double dip.

• Businesses planning on the PPP loan forgiveness under the CARES Act cannot include as eligible “payroll costs” the qualified leave wages paid under the FFCRA tax credit program for the EPSL and the Expanded FMLA employee leave programs. The employer will be receiving the FFCRA tax credits on theses wages so they cannot use these wages in computing the PPP loan to be forgiven.
• The CARES Act Employee Retention Credit allows employers to get a refundable tax credit against the employer’s 6.2 % portion of the social security payroll tax for 50% of the “qualified wages” up to $10,000 paid to each employee but, this credit is not available if the employer receives the PPP loan or the EIDL loan.
• The CARES Act allows for a deferral of the employer’s portion of the social security payroll taxes that are due through 12/31/20 to be deferred to 2021 and 2022 but, this deferral cannot be used by an employer that obtains a PPP Loan and the loan is forgiven under the CARES Act loan forgiveness provision. On the other hand, if a business receives an EIDL loan and does not receive loan forgiveness, they are able to defer payroll taxes under the CARES Act payroll tax deferral program.

The COVID-19 changes can help businesses get through these difficult times but employers need to make sure they don’t overlap the benefits and run into problems further down the road.

Employers need to carefully review their April, 2020 payroll to make sure the payroll Retention Credit and payroll tax deferrals are allowable depending on which SBA loan that they obtain.

Congress recently passed—and the President signed into law—the SECURE Act, landmark legislation that affects the rules for creating and maintaining employer-provided retirement plans. Whether you currently offer your employees a retirement plan, or are planning to do so, you should consider how these new rules may affect your current retirement plan (or your decision to create a new one).

Here is a look at some of the more important elements of the SECURE Act that have an impact on employer-sponsors of retirement plans. The changes in the law apply to both large employers and small employers, but some of the changes are especially beneficial to small employers. However, not all of the changes are favorable, and there may be steps you could take to minimize their impact. Please give me a call if you would like to discuss these matters.

It is easier for unrelated employers to band together to create a single retirement plan. A multiple employer plan (MEP) is a single plan maintained by two or more unrelated employers. Starting in 2021, the new rules reduce the barriers to creating and maintaining MEPs, which will help increase opportunities for small employers to band together to obtain more favorable investment results, while allowing for more efficient and less expensive management services.

New small employer automatic plan enrollment credit. Automatic enrollment is shown to increase employee participation and retirement savings. Starting in 2020, the new rules create a new tax credit of up to $500 per year to employers to defray start-up costs for new 401(k) plans and SIMPLE IRA plans that include automatic enrollment. The credit is in addition to an existing plan start-up credit, and is available for three years. The new credit is also available to employers who convert an existing plan to a plan with an automatic enrollment design.

Increased credit for small employer pension plan start-up costs. The new rules increase the credit for plan start-up costs to make it more affordable for small businesses to set up retirement plans. Starting in 2020, the credit is increased by changing the calculation of the flat dollar amount limit on the credit to the greater of

1. $500, or
2. The lesser of:
   1. $250 multiplied by the number of nonhighly compensated employees of the eligible employer who are eligible to participate in the plan, or
   2. $5,000.

The credit applies for up to three years.

Expand retirement savings by increasing the auto enrollment safe harbor cap. An annual nondiscrimination test called the actual deferral percentage (ADP) test applies to elective deferrals under a 401(k) plan. The ADP test is deemed to be satisfied if a 401(k) plan includes certain minimum matching or non-elective contributions under either of two safe harbor plan designs and meets certain other requirements. One of the safe harbor plans is an automatic enrollment safe harbor plan.

Starting in 2020, the new rules increase the cap on the default rate under an automatic enrollment safe harbor plan from 10% to 15%, but only for years after the participant’s first deemed election year. For the participant’s first deemed election year, the cap on the default rate is 10%.

Allow long-term part-time employees to participate in 401(k) plans. Currently, employers are generally allowed to exclude part-time employees (i.e., employees who work less than 1,000 hours per year) when providing certain types of retirement plans—like a 401(k) plan—to their employees. As women are more likely than men to work part-time, these rules can be especially harmful for women in preparing for retirement.

However, starting in 2021, the new rules will require most employers maintaining a 401(k) plan to have a dual eligibility requirement under which an employee must complete either a one-year-of-service requirement (with the 1,000-hour rule), or three consecutive years of service where the employee completes at least 500 hours of service per year. For employees who are eligible solely by reason of the new 500-hour rule, the employer will be allowed to exclude those employees from testing under the nondiscrimination and coverage rules, and from the application of the top-heavy rules.

Looser notice requirements and amendment timing rules to facilitate adoption of nonelective contribution 401(k) safe harbor plans. The actual deferral percentage nondiscrimination test is deemed to be satisfied if a 401(k) plan includes certain minimum matching or nonelective contributions under either of two plan designs (referred to as a “401(k) safe harbor plan”), as well as certain required rights and features, and satisfies a notice requirement. Under one type of 401(k) safe harbor plan, the plan either

1. Satisfies a matching contribution requirement, or
2. Provides for a nonelective contribution to a defined contribution plan of at least 3% of an employee’s compensation on behalf of each nonhighly compensated employee who is eligible to participate in the plan.

For plan years beginning after Dec. 31, 2019, the new rules change the nonelective contribution 401(k) safe harbor to provide greater flexibility, improve employee protection, and facilitate plan adoption. The new rules eliminate the safe harbor notice requirement, but maintain the requirement to allow employees to make or change an election at least once per year. The rules also permit amendments to nonelective status at any time before the 30th day before the close of the plan year. Amendments after that time are allowed if the amendment provides

1. A nonelective contribution of at least 4% of compensation (rather than at least 3%) for all eligible employees for that plan year, and
2. The plan is amended no later than the last day for distributing excess contributions for the plan year (i.e., by the close of following plan year).

Expanded portability of lifetime income options. Starting in 2020, the new rules permit certain retirement plans to make a direct trustee-to-trustee transfer to another employer-sponsored retirement plan, or IRA, of a lifetime income investment or distributions of a lifetime income investment in the form of a qualified plan distribution annuity, if a lifetime income investment is no longer authorized to be held as an investment option under the plan. This change permits participants to preserve their lifetime income investments and avoid surrender charges and fees.

Qualified employer plans barred from making loans through credit cards and similar arrangements. For loans made after Dec. 20, 2019, plan loans may no longer be distributed through credit cards or similar arrangements. This change is intended to ensure that plan loans are not used for routine or small purchases, thereby helping to preserve retirement savings.

Nondiscrimination rules modified to protect older, longer service participants in closed plans. Starting in 2020, the nondiscrimination rules as they pertain to closed pension plans (i.e., plans closed to new entrants) are being changed to permit existing participants to continue to accrue benefits. The modification will protect the benefits for older, longer-service employees as they near retirement.

Plans adopted by filing due date for year may be treated as in effect as of close of year. Starting in 2020, employers can elect to treat qualified retirement plans adopted after the close of a tax year, but before the due date (including extensions) of the tax return, as having been adopted as of the last day of the year. The additional time to establish a plan provides flexibility for employers who are considering adopting a plan, and the opportunity for employees to receive contributions for that earlier year.

New annual disclosures required for estimated lifetime income streams. The new rules (starting at a to-be-determined future date) will require that plan participants’ benefit statements include a lifetime income disclosure at least once during any 12-month period. The disclosure will have to illustrate the monthly payments the participant would receive if the total account balance were used to provide lifetime income streams, including a qualified joint and survivor annuity for the participant and the participant s surviving spouse and a single life annuity.

Fiduciary safe harbor added for selection of annuity providers. When a plan sponsor selects an annuity provider for the plan, the sponsor is considered a plan “fiduciary,” which generally means that the sponsor must discharge his or her duties with respect to the plan solely in the interests of plan participants and beneficiaries (this is known as the “prudence requirement”).

Starting on Dec. 20, 2019 (the date the SECURE Act was signed into law), fiduciaries have an optional safe harbor to satisfy the prudence requirement in their selection of an insurer for a guaranteed retirement income contract, and are protected from liability for any losses that may result to participants or beneficiaries due to an insurer’s future inability to satisfy its financial obligations under the terms of the contract. Removing ambiguity about the applicable fiduciary standard eliminates a roadblock to offering lifetime income benefit options under a plan.

Increased penalties for failure-to-file retirement plan returns. Starting in 2020, the new rules modify the failure-to-file penalties for retirement plan returns.

The penalty for failing to file a Form 5500 (for annual plan reporting) is changed to $250 per day, not to exceed $150,000.

A taxpayer’s failure to file a registration statement incurs a penalty of $10 per participant per day, not to exceed $50,000.

The failure to file a required notification of change results in a penalty of $10 per day, not to exceed $10,000.

The failure to provide a required withholding notice results in a penalty of $100 for each failure, not to exceed $50,000 for all failures during any calendar year.

 

If you would like to discuss any of the new laws, please call me at 513-731-6612.

 

Sincerely,

 

 

William E. Hesch

 

 

In December, 2019, Congress passed legislation to extend some tax provisions until December 31, 2020.  Since some of the provisions had expired on December 31, 2018, congress not only extended the legislation but also resurrected the provisions retroactively to January 1, 2018.  This means that you not only can apply the tax breaks to your 2019 and 2020 tax returns, you can also amend your 2018 return to tax advantage of the tax savings if they apply to you.

The top tax breaks that have been brought back that will affect the individual taxpayer are:

• The exclusion from income for the cancellation of acquisition debt on your principal residence (up to $2 million)
• The mortgage insurance premiums deduction as resident interest
• The 7.5% floor to deduct medical expenses on Schedule A of your individual tax return (instead of 10%)
• A deduction for above-the-line tuition and fees
• The deduction for nonbusiness energy property credit when you have energy-efficient improvements to your residence.

In addition to the nonbusiness energy credit, Congress also retroactively reinstated the energy-efficient home credit and the energy-efficient commercial buildings deduction for improvements back to January 1, 2018 through improvements placed in service by December 31, 2020.

The nonbusiness energy property credit and the residential energy-efficient property credit are for residential property owners.  The nonbusiness energy property credit is available when there are improvements for energy-efficient windows, doors, roofs and added insulation.  This credit is applied to the cost of the improvements but not the installation cost.  The residential energy-efficient property credit is applied the cost of qualified residential solar panels, solar water heating equipment, wind turbines, and geothermal heat pumps.  This credit is applied to the cost, as well as, the assembly and installation expenses.

The energy-efficient commercial buildings deduction was originally enacted in 2005 but expired on December 31, 2017.  With the retroactive reinstatement of this deduction (179D deduction), taxpayers may be able to claim the deduction for any qualifying property placed in service from January 1, 2006 through December 31, 2020 without filing amended tax returns.  The credit is applied to commercial property which includes apartment buildings with at least four stories.  The improvements must be made to the heating, cooling, ventilation, or hot water systems; interior lighting system; or to the building’s envelope.  The credit is up to $1.80 per square foot.  The credit is taken in the first year similar to bonus depreciation.