Guide to Employee Retention Credit for Health Care Practices
Health Care Field
The Employee Retention Credit (“ERC”) is a cash refund through a payroll tax that is available to medical, dental, and hospital-affiliated practices, including those owned through private equity, that meets the following criteria:
• Were affected by government orders imposing partial shutdowns on office activities, precluding access to hospitals, or limiting the ability to perform elective procedures; or
• Suffered significant declines in gross receipts. While many employers have some familiarity with the ERC, confusion exists around the qualifications and application processes. Did you know that medical, dental and hospital-related practices owned through private equity can qualify for the ERC? Even if you received PPP loans, you could still qualify
How to Qualify for The Employee Retention Credit
Government Mandate Test
Medical practices, dental practices, or hospital-affiliated organizations that experienced fully or partially suspended operations due to orders from an appropriate governmental authority to limit commerce, travel, or group meetings due to COVID-19 can qualify as Eligible Employers for purposes of the ERC. The period that the employer pays qualified wages lasts while the government mandates are in effect.
This was common in 2020 and early in 2021.
Examples that have allowed Medical, Dental, and Hospital-affiliated organizations to qualify include:
• A medical practice that had capacity restrictions on its waiting room in 2020.
• A medical practice whose doctors were restricted from performing elective procedures under COVID orders.
• A practice where hospital access restrictions delayed the ability to perform certain medical procedures.
• A physical therapy center that was subject to strict spacing requirements in a gym; thus, lowering the number of patients that could be seen in a day.
• A medical device company that installed and serviced robotic surgery equipment and whose technicians were restricted from entering a hospital due to COVID orders.
• Dental or medical offices that were required to close due to COVID restrictions and then re-opened with restrictions on how many patients could be seen.
This applies to most health care businesses.
