Nursing Homes and Home Care Agencies Seek Exemption from Health Care Law Requirement

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Beginning in 2014, the new Patient Protection and Affordable Care Act will mandate that employers who have 50 or more full-time employees must offer affordable health insurance coverage or risk paying a penalty. Nursing homes and home care agencies, because they rely so much on low-paying government program reimbursements, often cannot financially provide this benefit to its caregivers and are seeking to be exempted from the requirement, reports the New York Times today.

Healthcare Workers are Low-Wage Employees with Minimal, If Any, Healthcare Benefits

According to the 2011 Cost of Care Survey sponsored by Genworth Financial, long-term care costs in nursing homes and assisted living facilities has continued to rise over the last few years. The median annual rate for a private room costs $77,745 this year, compared to $60,225 in 2005.

Medicaid covers about two-thirds of the cost of nursing home residents and many states, facing severe budget problems, have reduced reimbursement payments. Because of this, employee benefits such as health insurance coverage are often limited or cut out entirely. Among workers who provide hands-on care to nursing home residents, one in four has no health insurance.

Read: Underfunded Nursing Homes Closing Leaving Some Seniors Stranded

Under the new law, coverage is deemed unaffordable if an employee’s share of the premium exceeds 9.5 % of his or her household income. The typical wage for a nursing assistant is $10 to $12 an hour. Dorie K. Seavey, director of policy research at the Paraprofessional Healthcare Institute says that 80% of direct-care workers have an income less than 400% of the poverty level.

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Nursing home executives are urging Congress to exempt their facilities from being forced to provide health insurance coverage to their employees. The estimated $200,000 a year penalty that would be inflicted upon a midsized nursing home would further exacerbate their dire financial condition.

Read: How to Choose a Nursing Home

Penalties and poor insurance reimbursements would not only affect nursing home workers, but also the families of the residents. As not all costs are covered by Medicaid and Medicare, Americans now pay approximately $17,520 more per year today for a nursing home than they did in 2005.

Unfortunately, says Mark Parkinson, president of the American Health Care Association, the largest trade group for nursing homes, “We do not have much ability to increase prices because we are so dependent on Medicaid and Medicare” for revenue.

Parkinson has offered several options for Congress to consider. One option would give nursing homes more time to comply with the requirement to offer coverage. Another proposal would waive or reduce the penalties for nursing homes “placed in financial distress as a result of the new mandates and fines.” Alternatively, Mr. Parkinson said, Congress could allow nursing homes to take tax deductions for the penalties, which under the 2010 law are nondeductible.

Home care agencies, which are even less likely than nursing homes to offer coverage to employees – one in three are uninsured - are also seeking an exemption or financial assistance, contending that they would otherwise have to increase charges to their clients, older Americans and people with disabilities.

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