- Amount of Overtime Work: According to the IFA, the DOL’s analysis of the proposed rule changes understated the extent of overtime work among companion care workers, at least among those working for franchise-operated companion care businesses. The IFA found that average amount of overtime worked by franchise employees is three times greater than that estimated by the DOL. As a result, the cost of paying overtime to employees will be far greater than DOL claims. DOL’s estimates are based on the number of employees currently working overtime. But if the proposal goes through, that number will increase significantly and so will employer costs, the study concludes.
- Consequential Costs: DOL also underestimates the management costs of adding staff and the cost of paying workers to travel between work sites. The DOL study acknowledges "additional managerial costs to agencies might occur as a result of changes in staffing" and adds that "the Department has no basis for estimating these costs, but believes they are relatively small.” IFA claims, however, that the increased costs of hiring, training, and managing additional employees is a major concern for many employers, and may be a greater cost than the DOL anticipates. IFA also found that the DOL’s estimate for paying workers who travel would cover only 2.5 percent of all companion caregivers.
- Employment Changes: Businesses that responded to the IFA survey indicated a strong intention to avoid paying higher overtime costs. As a result, many employers would hire additional workers at a low wage, which would in turn decrease take-home pay for many current hourly employees.
- Quality of Care: About 75 percent of those surveyed said they expected to pass along increased costs to their customers, thereby raising the cost of caregiver services for seniors. These costs often are direct to seniors, since Medicare and Medicaid only cover health services—and not all caregiver services are health-related.
For example, a plan could offer coverage consistent with a benchmark plan offering up to 20 covered physical therapy visits and 10 covered occupational therapy visits by replacing them with up to 10 covered physical therapy visits and up to 20 covered occupational therapy visits, assuming actuarial equivalence and the other criteria are met.The 10 categories are: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision.
Individual Mandate Repeal May Result in Millions Fewer Insured but No Major Premium Hike, RAND finds
Direct operating costs do not include the labor cost attributable to personnel whose services relating to the facility are not performed primarily on the premises of the eating facility. Thus, for example, the labor costs attributable to cooks, waiters and waitresses are included in direct operating costs, but the labor cost attributable to a manager of an eating facility whose services relating to the facility are not primarily performed on the premises of the eating facility is not included in the direct operating costs. If an employee performs services relating to the facility both on and off the premises of the eating facility, only the portion of the total labor cost of the employee relating to the facility that bears the same proportion to such total labor cost as time spent on the premises bears to total time spent performing services relating to the facility is included in direct operating costs. For example, assume that 60 percent of the services of a cook in the above example are not related to the eating facility. Only 40 percent of the total labor cost of the cook is includible in direct operating costs. For purposes of this section, labor costs include all compensation required to be reported on a Form W-2 for income tax purposes and related employment taxes paid by the employer. In determining the direct operating costs of an eating facility, the employer may include as part of the facility, vending machines that are provided by the employer and located on the same premises as the other eating facilities operated by the employer.Treas. Reg. §1.61-21(j) provides a valuation rule for valuing meals provided at an employer-operated eating facility for employees. CAUTION! Employers should be mindful that the IRS will apply a second prong of the test of whether a meal is being served at an “employer-operated eating facility” under Code Section 132. In a recent IRS Chief Counsel Memorandum, the IRS found that meals provided to airline crewmembers while on duty aboard an aircraft were not excluded from the employees’ gross income as a de minimis fringe benefit because they were not provided at “employer-provided eating facilities.” The meals were prepared by an independent third-party vendor at a facility on the ground. (Chief Counsel Memorandum 201151020, released Dec. 23, 2011) In the memorandum, the IRS noted,
the regulations contemplate that an eating facility is a location at which individuals are employed to prepare and/or serve food, stating to this end that components of the direct operating costs of an eating facility include “personnel whose services relating to the facility are performed on the premises of the eating facility (Treas. Reg. §1.132-7(b)(ii)) and ‘labor costs attributable to cooks, waiters and waitresses.” No guidance raises the inference that the exclusion of Section 132(e) extends to all meals provided on the employer’s business premises, irrespective of whether or not they are provided at an “eating facility.”De Minimis Standard of Code Section 132 Code Section 132(e) provides that “the term ‘de minimis fringe’ includes the operation by an employer of any eating facility for employees if (1) such a facility is located on or near the employer’s business premises, and (2) revenue derived from such a facility normally equals or exceeds its direct operating costs.”