Q: What expenses for group health care benefits will be considered payroll costs that are eligible for loan forgiveness?
A: Employer expenses for employee group health care benefits that are paid or incurred by the borrower during the Covered Period or the Alternative Payroll Covered Period are payroll costs eligible for loan forgiveness. However, payroll costs do not include expenses for group health care benefits paid by employees (or beneficiaries of the plan) either pre-tax or after tax, such as the employee share of their health care premium. Forgiveness is not provided for expenses for group health benefits accelerated from periods outside the Covered Period or Alternative Payroll Covered Period.
If a borrower has an insured group health plan, insurance premiums paid or incurred during the Covered Period or Alternative Payroll Covered Period qualify as “payroll costs,” as long as the premiums are paid during the applicable period or by the next premium due date after the end of the applicable period. As noted, only the portion of the premiums paid by the borrower for coverage during the applicable Covered Period or Alternative Payroll Covered Period is included, not any portion paid by employees or beneficiaries or any portion paid for coverage for periods outside the applicable period. Loan Forgiveness Payroll Costs FAQ 8 outlines the rules that apply to owner health insurance.
This Q&A was based on information contained in the Treasury Department’s October 13, 2020, version of “Paycheck Protection Program Loans, Frequently Asked Questions on PPP Loan Forgiveness,” which may be updated from time to time. This CARES Act / SBA / PPP Loan Forgiveness-related issuance may be found here: https://home.treasury.gov/system/files/136/PPP--Loan-Forgiveness-FAQs.pdf