The CARES Act introduced Employee Retention Credit in 2020. This cash refund encourages medical practices, hospital-affiliated, and dental businesses to receive relief and keep their employees on the payroll.
The pandemic brought an economic collapse for many medical and healthcare practice groups. However, if a business workplace is closed by governmental directives, it can receive ERTC relief.
Hospital-affiliated medical and dental practices, whether operating under government orders or owned by private entities, can benefit from the ERTC healthcare relief if they are considered partially suspended by governmental orders or meet the following criteria.
- If the government order shuts down non-urgent and elective medical procedures of an employer.
- If the employer’s workplace is closed off for specific purposes.
- If the employer is continuing operations remotely.
- If the workplace remains open for other business purposes.
- The essential businesses are considered partially suspended if the government orders allow only certain operations to cease.
Suppose all business purposes continue to operate even if they were subjected to modifications due to government orders. In that case, it is not considered a partial suspension unless the orders substantially affect the business operations.
Medical Practices and Healthcare Providers Getting ERTC Tax Credits
Those healthcare practices whose activities were interrupted by pandemic-related governmental orders can receive a refundable employee retention credit.
Many businesses and employers are already thoroughly familiar with the ERTC, as they are encouraged to retain their employees on the payroll. But you must wonder which medical practices are approved and qualifies for ERTC funds.
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ERTC; Healthcare Practices That Qualify
Simply put, employers who wholly or partially suspend their activities qualify for ERTC. This suspension can be due to authorized governmental directives or if their gross receipts decrease.
Every state government has imposed a temporary prohibition of elective procedures, which results in healthcare and medical practices qualifying for the ERTC.
Other situations which allow such healthcare providers to become eligible are:
- Capacity constraints lead to reduced patient visits.
- Closure of office activities for sanitary standards compliance.
Following the above deductions, examples of qualified hospital-affiliated medical or dental groups are:
- Certain medical operations were restricted due to hospital access limitations.
- Those practices have waiting room capacity limitations.
- Physical treatment clinics suffer a limitation in the number of patients due to spacing rules.
- Dental offices or medical clinics that were subjected to closure due to pandemic regulations reopened but with a limitation on the number of patients treated.
- Medical practices doctors who were prohibited from performing elective procedures.
Can Your Medical Practice Get ERTC Tax Credits?
If your medical practice operations underwent a partial or complete suspension, then you qualify for ERTC purposes.
For 2020 ERC purposes, the medical offices with 100 or less than 100 employees working full time can reap maximum benefits from the ERTC calculations if they continue to be eligible under the Government Mandate Test or the Gross Receipts Test. The restrictions were loosened due to 2021 ERC purposes by increasing the threshold to less than or equal to 500 full-time employees.
Government Mandate Test
Those medical practices that experience partial complete suspension by government authorities to limit travel, group meetings, and commerce due to the pandemic qualify for ERC purposes.
Those medical practices that qualify in this way are:
- Those were having waiting room capacity restrictions in 2020.
- Those having hospital access restrictions lead to delayed medical procedures.
- Doctors were restricted from performing elective procedures.
- Physical therapy centers have spacing requirements.
Gross Receipts Test
A medical practice will qualify for employee retention credit if its gross receipts are more than 20% lower in the first, second, and third quarters of 2021 than the gross receipts in the calendar quarter of 2019.
The decline criteria for 2020 is difficult to meet since it is required to show a 50% reduction.
Need ERTC Assistance?
Be sure to take full advantage of the ERTC program for a maximum refund according to your qualifications. You can also consult with our ERTC consultants to learn how to maximize the credit you are entitled to. Take a moment to complete this eligibility form or call 360 641-7709 so that our experts can determine whether you are eligible for a tax credit and provide guidance to qualify your medical practices for the credit.