NOVEL CORONAVIRUS PANDEMIC ("COVID-19")

12 Months Ended

Dec. 31, 2020

Unusual or Infrequent Items, or Both [Abstract]

In March 2020, the World Health Organization declared COVID-19 a pandemic. As a healthcare at home company, we have been and will continue to be impacted by the effects of COVID-19; however, we remain committed to carrying out our mission of caring for our patients. We will continue to closely monitor the impact of COVID-19 on all aspects of our business, including the impacts to our employees, patients and suppliers; however, at this time, we are unable to estimate the ultimate impact the pandemic will have on our consolidated financial condition, results of operations or cash flows.

On March 27, 2020, the CARES Act was signed into legislation. The CARES Act provides for $175 billion to healthcare providers, including hospitals on the front lines of the COVID-19 pandemic. Of this total allocated amount, $30 billion was distributed immediately to providers based on their proportionate share of Medicare fee-for-service reimbursements in 2019. Healthcare providers were required to sign an attestation confirming receipt of the Provider Relief Fund ("PRF") funds and agree to the terms and conditions of payment. Our home health and hospice segments received approximately $100 million from the first $30 billion of funds distributed to healthcare providers in April 2020, which is inclusive of $2 million related to our joint venture care centers (equity method investments). We also acquired approximately $6 million of PRF funds in

connection with the acquisition of AseraCare. Under the terms and conditions for receipt of the payment, we are allowed to use the funds to cover lost revenues and health care costs related to COVID-19, and we are required to properly and fully document the use of these funds in reports to the U.S. Department of Health and Human Services ("HHS").

For our wholly-owned subsidiaries, we have decided to only utilize PRF funds to the extent we have qualifying COVID-19 expenses, which totaled $33 million for our home health and hospice segments during the year ended December 31, 2020. Accordingly, for our wholly-owned subsidiaries, we will not be using PRF funds to cover lost revenues resulting from COVID-19. The grant income associated with the COVID-19 expenses incurred to date is reflected in other operating income within our consolidated statement of operations.

HHS issued new guidance in September 2020 noting that PRF funds can be used towards lost revenues or expenses attributable to COVID-19 through June 30, 2021. We do not believe that we will fully utilize the funds received; therefore, we recorded a liability related to the funds that we do not expect to utilize totaling $60 million which is reflected in the Provider Relief Fund Advance account in current liabilities within our consolidated balance sheet. Funds that we intend to use in the future to cover COVID-19 expenses, which we have estimated to be approximately $12 million, have been recorded to a deferred liability account within accrued expenses in our consolidated balance sheet. These estimates may change as our ability to utilize and retain the funds will depend on the magnitude, timing and nature of the impact of the pandemic. In summary, the total funds that we have received from the CARES Act PRF as of December 31, 2020 consist of the following (amounts in millions):


	Amount
Funds utilized during the year ended December 31, 2020	$	33.3
Estimated funds to be utilized January 2021 through June 2021	11.6
Estimated funds to be repaid to the government	60.0
Funds received by unconsolidated joint ventures	1.9
	$	106.8

On April 24, 2020, HHS distributed an additional $18 billion in funds to healthcare providers. We did not receive, nor apply, for any additional funds from this second distribution. On October 1, 2020, HHS announced $20 billion in new funding to healthcare providers under the Phase 3 general distribution. We did not apply for any additional funds from this distribution.

The CARES Act also provides for the temporary suspension of the automatic 2% reduction of Medicare claim reimbursements (sequestration) for the period May 1 through December 31, 2020 and the deferral of the employer share of social security tax (6.2%), effective for payments due after the enactment date. Fifty percent of the deferred payroll taxes are due on December 31, 2021 with the remaining amounts due on December 31, 2022. As of December 31, 2020, we have deferred $55 million of social security taxes; approximately $28 million is reflected in each of payroll and employee benefits and other long-term obligations within our consolidated balance sheet.

In December 2020, Congress passed additional COVID-19 relief legislation as part of the Consolidated Appropriations Act, 2021. This legislation extended the suspension of sequestration through March 31, 2021.

Our personal care segment did not receive funds under the CARES Act; however, they did receive funds from the Mass Home Care ASAP COVID-19 Provider Sustainability Program, which are intended to cover costs related to the public health emergency. The grant income associated with the funds received, which totaled $1 million during the year ended December 31, 2020, is reflected in other operating income within our consolidated statement of operations.