Finished. Finito. Over.
Many NY home health care agencies thought they wouldn’t be able to do business any more when wage parity became law.
But savvy agencies, with help from TPAs, learned to make wage parity a selling point for their businesses.
When Governor Andrew Cuomo took office on January 1, 2011, he made redesigning New York’s Medicaid program a top priority.
A specially appointed Medicaid Redesign Team (MRT) began an in-depth study of NY Medicaid. They discovered—with some well-placed “help” from advocacy groups—that Medicaid-covered “home health aides” were being grossly underpaid.
Home health aides (or HHAs) help patients with “activities of daily living” or “ADL”s. Those activities can include dressing, bathing, eating, meal prep, shopping, and toileting. HHAs can’t usually perform skilled care activities, such as dressing wounds or giving insulin shots. However, their work is essential and impacts the patient’s well-being.
Advocates made the case that the HHAs’ low pay was a primary factor in the industry’s high caregiver turnover rates and poor quality of care.
The MRT listened, and in late 2011 Governor Cuomo signed the Home Care Worker Wage Parity law to bridge the wage gap for New York HHAs.
Wage parity basics
The details of wage parity laws can be incredibly complex and confusing, often requiring legal counsel, but the basics are simple.
New York wage parity establishes a minimum total compensation for home health aides who perform Medicaid reimbursed work in New York City and Nassau, Suffolk, and Westchester counties.
The “minimum total compensation” has two parts:
- Base wage – This amount is based on New York’s living wage law and must be paid in cash wages.
- Wage parity benefits – This portion can be paid in cash wages OR employee benefits. Eligible employee benefits include health, education, pension, dependent care, and more.
Is it better for an agency to pay wage parity in benefits or cash wages?
Good question! Benefits are almost always more cost-effective than cash payments. Find out why here.
To ease the transition, legislators set the compensation amounts to increase slowly, year by year, to their target rates. Wage parity rates in 2021 are now at their maximum under the original law:
|Current Required Wage Parity Benefits
|New York City||$15||$4.09|
|Nassau, Suffolk & Westchester counties||$15||$3.22|
There is movement in the legislature to increase wage parity rates further, but so far, none of the proposed bills have passed.
Complying with wage parity laws
The Wage Parity Law was signed in 2011, but didn’t take effect until 2012. Agencies and brokers had a year to prepare.
Many home health care agencies were terrified about the impact of the new regulations. In 2012, a group of agencies and their trade association challenged the law in court, but the judge ruled firmly against them.
Wage parity was the law in New York, and agencies had to comply or lose their Medicaid payments. They had to maintain detailed records and submit a compliance certification each year.
The industry adjusted to the changes, although wage parity laws are never static. For example, in April 2020, the 20-21 NY State Budget tightened the screws on wage parity compliance by adding:
- Restrictions on how agencies can use wage parity money
- Detailed wage parity reporting on employees’ Notice of Pay Rate forms and pay stubs
- Hefty fines and criminal penalties for non-compliant agencies, as follows:
|First offense||$500 fine, 30 days imprisonment, or both|
|Second offense||$1,000 fine, and the contract on which the violation occurred and all payments under that contract will be forfeited|
Keeping up with the latest in wage parity law is a MUST for agencies. It’s one of the many reasons agencies hire a third party TPA to administer wage parity benefits.
Make the law work for you
Even though some agencies were convinced that wage parity would be the end of them, the industry is still going strong.
Looking back on ten years of wage parity, Mr. Chaskie Rosenberg, Melody Benefits founder, reflects. “People didn’t believe Wage Parity was going to pass. And when it passed, they didn’t believe it was going to stay. It took time for agencies and brokers to implement it,”
Some agencies looked for loopholes and shortcuts to avoid the increased costs. But Chaskie explains that instead of fighting the law, It’s better to embrace it.
“The letter of the law is always open to interpretation, but what is the spirit of the law?” asks Chaskie. Clearly, the legislation intended to give MORE to HHAs. The state wants to support them with a living wage to be a more stable, skilled workforce.
“Follow the spirit of the law and figure out how to make it work to your advantage. Don’t just give wage parity benefits. Give AMAZING benefits that your employees will love. Educate your employees on how to use them. Show your employees that you’re trying to help them. Figure out what will recruit and retain top aides.”