Costs are steadily rising across the nation due to inflation and recessionary times, putting pressure on businesses and consumers alike. Combined with a need to attract more workers with competitive salaries and benefits, homecare agencies, in particular, have a lot to consider when it comes to managing their bottom line.
For those operating in New York, October 1 brings another cost to consider – a $2 increase in the hourly minimum wage, which increases another $1 per hour in October 2023.
New York has a homecare workforce that is large and growing rapidly. The state employs 30% more homecare aides per capita than any other state, 140% more than the U.S. average. Yet, despite these numbers, homecare will account for more new jobs than any other occupation in the state over the next decade. Despite the marketplace growth, there is a massive shortage of workers, with the current shortage of 25,000 homecare workers predicted to grow to 80,000 in the next three years.
To address this demand, earlier this year, the State of New York’s final budget approved a plan for $7.7 billion in funding to support this $3 per hour wage increase for homecare workers over the course of two years. The current hourly minimum for homecare aides in New York City, Long Island and Westchester is $15, while it stands at $13.20 in other parts of the state.
While the deadline for these minimum wage increases is quickly approaching, uncertainty remains about whether, or how, the budget will reimburse homecare providers and managed care plans for the increase in minimum wage.
The situation remains fluid. Meetings are happening with various agencies in Albany, according to Emina Poricanin, a lawyer specializing in employment and healthcare law, who spoke during a webinar hosted last week by the Community Health Care Services Foundation and the NYS Association of Health Care Providers. Given the uncertain circumstances, there is a possibility that when October 1 arrives, homecare agencies and payers will be required to fund the increases themselves if a new rate of reimbursement has not been negotiated and confirmed. Poricanin mentioned that the New York Department of Health (NYDOH) said in May that it was optimistic that the Centers for Medicare & Medicaid Services (CMS) would approve the increase and money would be available in New York to pay for it. However, at the time of the webinar last month, the funding had not been secured by New York State or the plans.
Closing the Pay Gap in Homecare
With the uncertainty surrounding reimbursement, homecare providers must prepare now for a number of potential scenarios come October 1, and understand the details of the minimum wage increase, including:
- How to pay – The biggest question, perhaps, is how to pay for the wage increase if reimbursements are not determined or the state doesn’t have money. Consider how to cover expenses during the weeks when the money isn’t in hand. Lines of credit could also potentially help address paying the increased wages in the short term.
- Who is eligible for the raise – The increase in minimum wage is not tied to provider type, but rather applies to specific titles. These titles include home health aides and personal care aides (both Medicare and private payer), NHTB/TBI home care workers, CDPAP personal assistants, and aids employed under a LDSS/FFS contract. Poricanin noted that she does not believe that professional titles, such as LPNs and nurses, are covered under the wage increase.
- What are the obligations to pay a spread, split, or call-in premium – Total weekly wages paid must be equal to or greater than the total due for all hours worked at the minimum wage and overtime rates, plus one additional hour at the minimum wage for each day in which a spread and/or split occurs. No additional payment for call-in pay is required for a workweek if the amount paid to the employee for the workweek exceeds the total of all hours worked at the minimum wage and overtime rates, plus any call-in pay owed.
- What if employees are unionized – The minimum wage increase does not need to be bargained with the union, as it will increase regardless of the union contract. However, changes to shift premiums – such as holiday pay premium, weekend and shift differentials – must be bargained. For example if a contract calls for a $1.20/hour premium on these shifts, the premium will not automatically go up by $1.20 once the $2 wage increase occurs. The union and employer need to agree on a new rate.
- What happens with paid time off – After October 1, any vacation, sick time, or leave will be paid out at the higher rate of pay, including balances of PTO that rollover from previous years.
- What are the implications on wage parity – Total compensation in New York City will be $21.09 with a $17 minimum wage rate, and $20.22 with a $17 minimum wage rate in Long Island and Westchester once the increase goes into effect. Because the wage cost has increased, employers may want to consider allocating more money toward benefits to avoid higher payroll tax and overtime increase implications.
This move is a major milestone in the homecare industry, and while these changes only affect a particular region for the time being, such increases are expected elsewhere. By considering all options and taking proactive measures now, homecare providers can minimize the impact and avoid consequences of non-compliance – even while we await final decisions to be made before the October 1 minimum wage increase takes effect in New York.