COVID-19 and Next Steps for Dentists
In the first three weeks of March, our country has been witness to unprecedented change and developments regarding the current crisis are moving faster than anyone could have anticipated. More than ever it is important to act fast and make smart decisions as a practice owner or associate within a dental practice. We have developed a list of five areas to consider as you make smart decisions amid the COVID-19 pandemic.
Please be aware that the environment is fluid and developments are rapidly changing. Following are some areas where you may want to consider consulting your advisors and topics that have potential for reviews and decisions. We are following emerging details and are committed to providing updates as changes occur.
- Contact your bank about your practice and real estate loans.
Many banks are willing to provide forbearance of debt obligations. This may help lower your monthly obligations and help to weather the storm. Many banks are also offering line of credit options to bridge the gap between now and when your office will be open again.
- SBA disaster relief loan.
The dental industry is significantly affected by COVID-19 and offices are being forced to shut down. You may benefit from applying for a disaster relief loan regardless of your current cash position. We suggest requesting 3 to 6 months of fixed costs, and we are happy to help you determine that amount.
- Sign the ADA petition to have Congress include dentists in COVID-19 relief packages.
The ADA is asking Congress to help dentists with loans, student loan debt deferrals, deferring or eliminating payroll taxes, and other business-related relief. We encourage you to sign the petition and urge your colleagues to do the same.
- Alternative payment options with vendors and landlord.
You may wish to request payment options that will allow you to conserve cash flow. Consider contacting your dental suppliers, labs, etc. If you do not own your own property, then you may also need to contact your landlord and request alternative payment options or delayed rent payments. We suggest reviewing your lease since many leases include provisions that may offer protection during a crisis or forced closure.
- Consult with your team of professionals.
It is important that you are consulting with your advisory team; CPA, attorney, human resources specialists, health insurance broker, business insurance broker, etc. In times of crisis, the world moves quickly and it is important to know the rules that will impact your decisions. Below is a list of areas for review and the professionals that can help you make informed decisions:
- Unemployment Benefits
Many practices are either closed to patients or seeing emergencies only. Due to the reduced schedule, the employees and potentially the practice owner may be eligible for unemployment benefits. We suggest that you seek advice from a qualified HR professional, employer association, and/or your employment attorney. There are several laws within the WARN Act and the new First Coronavirus Response Act (effective 4/2/20) that could have an impact on your decisions. Your state department of labor is also a good resource. Check out their website for updates and guidance.
You may wish to communicate with employees that this is temporary, and if they opt to take their PTO first, then their eligibility for unemployment benefits could be delayed. As the practice owner, to be eligible for benefits, you may need to stop your payroll and distributions as well. Any money you take from your practice can be considered a loan and be required to be paid back to the practice.
- First Coronavirus Response Act
Effective April 2, 2020, this new Act is complicated and there are still many provisions that need clarification, but it may impact more businesses than currently anticipated. The Act states that employers with fewer than 500 employees are required to provide paid sick leave. However the Secretary of Labor has the authority to exempt small business with fewer than 50 employees if the requirements of the Act would cause harm to the business. The Act also includes tax credits for employers that pay sick or family medical leave. Consult your tax advisor for more details.
- Health Insurance
Many dental practice owners want to continue paying health insurance for their employees, but the biggest hurdle could be their employee manual. The manual generally requires a certain number of hours to be eligible, which would not be possible when there is a temporary lay off. The hope is that this point will be clarified in the First Coronavirus Response Act. Until then, it is important that you consult with your attorney and insurance broker.
- Other Insurance Benefits
We recommend a review of your current insurance benefits to see if you have coverage for business overhead insurance or loss of revenue. It is not always available or included in every policy, and thus it is important to know the provisions that your coverage provides.
- Tax Filing and Payments
The 2019 tax year filing deadline and due date for 2020 1st quarter estimated taxes has been delayed until July 15th. If you owe taxes, you will have more time to pay those taxes. If you have a refund, we encourage you to file right away. Regardless, it will be important to complete your taxes now and know whether you have a refund or tax due.
During this challenging time, our Dental Practice Advisor team is happy to address your questions by email, phone call or online meeting. We are not charging a fee for these consultations. We are pleased to have opportunities to support the dental industry and look forward to seeing our industry survive and rebound quickly.