Affordable Care Act and Home Care

Each year, Support For Home In-Home Care participates in the Private Duty Benchmarking Study, conducted by Home Care Pulse. These studies cover a wide range of topics and are quite valuable to home care agencies – and to the clients they serve.

Among the topics covered in the 2015 study is the impact of the Affordable Care Act on home care. That impact is not just on the agencies, themselves, but on the Home Care Aides we employ. Through that impact, the effect flows straight to the clients and families that we serve.

Affordable Care Act and Home Care

Affordable Care Act and Home Care

To be clear, the purpose behind the Affordable Care Act – finding a way for everyone to have health insurance – is one we all support strongly. The question has always been – and still is – how is that to be effected? As you know, the primary emphases under the Affordable Care Act are two-fold. One is the subsidies available through the state exchanges for many people. The other is employer provided and financed health insurance programs. It is the latter, the employer mandate, that is the focus I want to cover here.

The past few years, especially in California, where we are, but at the federal level as well, the push has been to get Home Care Aides covered by overtime provisions of wage and hour labor law, as well as other forms of “protection.” I use quotes not in any cynical way, but to stress that such protection, aimed at increasing the income of Home Care Aides, has often had the opposite effect, as I have written about many times before. In fact, the incomes of many professional caregivers has been reduced, since families cannot afford a significant increase in costs, forcing agencies to limit individual Home Care Aides’ hours.

The same kind of negative impact on professional caregivers is at work with the Affordable Care Act’s employer mandate – as it is currently implemented. Why? Well, it starts with the fact that home care is a low margin business. With my own background in high tech, I know our margins in home care are at least 75%-80% less than what they were when I worked at Intel Corporation. When my co-owner and I left Intel to start our home care business, it was a choice driven by passion, not by financial considerations. If we had wanted to continue to make a lot of money, we would have stayed at Intel! 🙂

So, we start with a quite modest margin. Then, the Affordable Care Act defines “full-time” as 30 hours per week, rather than the standard 40 hours of almost all other laws – and the Small Business Administration. So, all “full-time” employees have to be offered heavily employer funded health insurance, with very significant penalties if that does not happen.

The larger home care agencies have much more revenue to apply to this health insurance coverage mandate. Even some, barely half of agencies with over 100 full time equivalent (FTE) employees are able to afford to meet the mandate (54.4%). 28% of the largest agencies have implemented policies to ensure that most employees to do reach the 30 hours per week average – in other words, do not show up as FTE employees. So, there are Home Care Aides who were being restricted, in the past two years, to 40 hours or less, to avoid overtime, who now are restricted to less than 30 hours per week. There income obviously suffers greatly, as a result.

Agencies with less than 51 FTE employees find it even harder to comply with the employer mandate. 57% of those agencies intend to keep their employees below 30 hours per week and / or make sure their employee base is less than 50 FTE employees. Their Home Care Aides are obviously hit even harder than the larger agencies’. Additionally, this disadvantage will drive many smaller agencies out of business, consolidating home care in the hands of fewer and fewer large corporations.

So, regardless of what the Supreme Court decides about state versus federal subsidies for individuals in June 2015, the impact on home care agencies, their employees and their clients and families is already clear under the Affordable Care Act – and it isn’t good.

Your thoughts?

Best wishes. Bert



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