Home Health Care Wages to Increase

Minimum wage and overtime protections have been extended to nearly two million home care workers, the Obama administration announced recently, overturning a decades-old exemption.

For many years, advocates for low-wage workers have pushed for this change, arguing that home care workers --who take care of the elderly and disabled Americans -- have been wrongly classified into the same “companionship services” category as babysitters. Those companionship services workers have always been exempt from minimum wage and overtime coverage.

Under the new rule, home care aides, unlike babysitters, would be covered under the Fair Labor Standards Act, the nation’s main wage and hour law. The federal government says six million of the 40 million Americans older than 65 need some form of daily assistance to live outside a nursing home. Federal officials estimate that the number will double to 12 million by 2030.

But in an unusual move, the Obama administration said the new regulation would not take effect until Jan. 1, 2015, even though regulations often take effect 60 days after being issued. The reason for the delay, according to the administration, is to give families that use these attendants, time to prepare and to give state Medicaid programs, which administer home care workers, time to adjust to the new law and get ready for it since it has financial implications for the states.

Industry experts say most of these workers are already paid at least the minimum wage, but many do not receive a time-and-a-half premium when they work more than 40 hours a week. About 20 states exclude home care workers from their wage and hour laws. The nation’s home care workers usually earn $8.50 to $12 an hour, according to industry officials. The federal minimum wage is $7.25 an hour. According to the Obama administration, almost 40 percent of aides receive government benefits like food stamps and Medicaid. Ninety-two percent of these workers are female, almost 30 percent are black and 12 percent are Hispanic.

Industry officials said the changes would cause increases in Medicaid and Medicare spending, raise costs for families that use such services, and result in fewer jobs for home care workers. Some advocates argue that the new rule will mean people will receive less care because many people will hire home care aides on a part-time basis instead of hiring them full time.

The new rule also was criticized by lawmakers, like Rep. John Kline, R-Minn., chairman of the House Education and the Work Force Committee and Rep. Tim Walberg, R-Mich., who heads the panel’s subcommittee on workforce protections. They argue that it would not only raise costs, but would “limit access to in-home care for vulnerable Americans.”

“Faced with higher costs, some individuals will have no choice but to leave their homes and enter institutional living,” the two lawmakers argued. Long-term nursing home care, much of which is paid by Medicaid, is generally more expensive than home care.

But Labor Department officials disagreed with the lawmakers and the industry officials, countering that 15 states now provided overtime and minimum wage protection to home care aides and there’s been no evidence that it resulted in job loss or any serious negative impact for the workers or the people using the services.

The new rule defines care as assisting with the activities of daily living, like dressing, grooming, feeding or bathing, and assisting with “instrumental activities of daily living,” like meal preparation, driving, light housework, managing finances and assisting with the physical taking of medications.

Live-in domestic service workers who reside in the employer’s home and are employed by an individual, family or household are exempt from overtime pay, although they must be paid at least the federal minimum wage for all hours worked.

Elderly Women Falling into Extreme Poverty

While national poverty rates remain virtually unchanged from last year, a new study finds that one group, elderly women, have fallen deeper into poverty. Among women 65 and older, the “extreme poverty” rate rose dramatically – 18 percent in 2012. The study, by the National Women’s Law Center, defines extreme poverty as people with an annual income of $5,500 or less for older individuals living by themselves.

“The cause has to be something that hits elderly individuals particularly hard,” Kate Gallagher Robbins, a senior policy analyst at the National Women’s Law Center, told MSNBC recently. ”We also know that poverty for elderly men and women was statistically unchanged so we are talking about a group of individuals who went from being poor to extremely poor.”

The extreme poverty rate for elderly women ticked up to 3.1% in 2012 from 2.6% in 2011. An additional 135,000 elderly women became categorized as extremely poor, bringing the total number of elderly women in extreme poverty to 733,000. Sixty-two percent of elderly women in this group are white, non-Hispanic, 16% are Hispanic, 17% are black, 4% are Asian and 2% are Native American.

Why the big increase? Several potential reasons, Robbins speculated. “One factor might be cuts in recent years to Social Security Administration funding which may be making applications for [Supplemental Security Income] more difficult,”

Without Social Security, she argues, almost 15.3 million more elderly individuals would have been poor in 2012. Lawmakers on Capitol Hill, as one option toward a long-term budget fix, are debating switching the cost-of-living adjustment to the chained CPI, which will reduce the value of benefits for current beneficiaries. The study’s finding, Robbins argues, would make such cuts “unconscionable.”

Another possible reason for the rise in the extreme poverty rate for older women could be unemployment insurance benefits. Since older workers are more likely to be unemployed for longer periods of time, the likelihood that their unemployment insurances benefits expired, or even cut, between 2011 and 2012, is high. Overall, the poverty rate for women in 2012 was 14.5 percent, higher than the men’s poverty rate, which was 11 percent

Observation Care Lawsuit Thrown Out

A federal court judge recently dismissed a lawsuit which was filed against the government by 14 Medicare beneficiaries who were denied nursing home coverage because they had been kept in the hospital under “observation status.”

Under Medicare rules, only patients admitted to a hospital for at least three consecutive days are eligible for coverage of follow-up nursing home care.

The beneficiaries who brought the suit stayed in the hospital for observation and that time doesn’t count toward the three-day requirement. While there appears to be little difference between being called observation status and fully admitted to the hospital in terms of services offered, the observation patients argue it cost them tens of thousands of dollars more in nursing home bills.

The lawsuit, filed in Connecticut, sought to eliminate the observation classification or alternatively require hospitals to tell patients when they are “under observation” and then create a clear appeals process that observation patients could follow to challenge Medicare’s coverage decisions. Under current law, hospitals are not required to tell patients they are under observation status while they are in the hospital, often causing shock, surprise and huge medical bills when patients and their families find out.

Department of Health and Human Services lawyers argued the case should be dismissed because these patients should have first completed their appeals before filing a lawsuit, among other reasons. Judge Michael P. Shea dismissed that argument but still ruled against the seniors, citing a 2008 federal court decision that upheld the right of the HHS Secretary to let hospitals and doctors determine whether patients should be admitted to the hospital.

The decision did not sit well with Alice Bers, an attorney at the nonprofit Center for Medicare Advocacy, which represented the 14 seniors and which is reviewing the judge’s 50-page ruling to decide whether or not to appeal. “We are very disappointed with the court’s decision,” Bers told Kaiser Health News recently. “The decision removes much of the responsibility for observation status from the Secretary of Health and Human Services and places it on hospitals and doctors, even though the Secretary is in charge of making sure that hospitals meet their Medicare obligations,” Bers argued.

While his decision went against seniors, Judge Shea, in his decision, did acknowledge that observation patients “have a greater financial responsibility for the hospital services they received – and for any subsequent SNF (skilled nursing facility) stay – than if they had been admitted as inpatients” and cited the case of a Connecticut woman who paid $30,000 for nursing home care that Medicare would not cover.

In 2011, 1.6 million Medicare beneficiaries entered hospitals as “observation patients” – a 70 percent rise in the past five years. At the same time, Medicare hospital admissions have declined slightly.

While the Connecticut case may or may not be appealed, the observation fight continues. The American Hospital Association is suing Medicare to eliminate the observation classification because hospitals have to refund payment for an admitted patient if the agency’s auditors later determine that patient should have been on observation status.

Persistent Income Disparities for Seniors on Medicare

Future Medicare recipients won’t be much better off financially than current beneficiaries are now, a new analysis from the Kaiser Family Foundation suggests. The current disparities that now exist between white, black Hispanic beneficiaries on income, savings and home equity will all continue to persist, the study found.

In 2012, half of all Medicare beneficiaries had annual incomes below $22,500, with median income considerably lower among black and Hispanic beneficiaries ($15,250 and $13,800, respectively) than among white beneficiaries ($24,800). By 2030, median incomes for black and Hispanic beneficiaries will increase to $19,000 and $18,100, respectively, in inflation-adjusted 2012 dollars, while for white Medicare recipients, median income is expected to be $32,800. The median income for beneficiaries is projected to be $28,600 in 2030, according to the Kaiser analysis of federal data.

Other factors will diminish income for future retirees, the Kaiser Family Foundation study found, including the increase in Social Security’s full retirement age from 65 to 67; the continued shift among employers from defined-benefit pensions to defined-contribution pensions; and a decline in the number of employers offering retiree health benefits.

“If this trend continues, fewer future Medicare beneficiaries will have retiree health benefits and more will be responsible for paying Medicare premiums and out-of-pocket costs,” the report notes. “Furthermore, rising budget deficits will increase pressure to reduce spending, increase taxes, or both.”

On Capitol Hill, both Democratic and Republican lawmakers have suggested overhauling Medicare to limit federal spending on entitlements in an effort to reduce the deficit. House Budget Committee Chairman Paul Ryan, R-Wis., has suggested limiting the government’s contribution through a “premium support” plan for Medicare beneficiaries as a way to help control entitlement spending. President Barack Obama’s fiscal 2014 budget plan would ask future beneficiaries to pay more for home health and outpatient services.

But the Kaiser Family Foundation report suggests that Medicare beneficiaries may have a harder time paying more for services in the future. Median savings for all Medicare beneficiaries were $63,100 in 2012. For whites, the medium savings were $85,950 while for blacks the figure was $11,650 and for Hispanics it was $12,050. By 2030, the projected median savings figure will rise to $108,350 with savings for white beneficiaries expected to be $147,050 more than four times that for blacks ($34,250) or Hispanics ($35,700).

Also contributing to this report were: Kaiser Health News, New York Times, MSNBC, Reuters, Associated Press, Bloomberg.

Alan Schlein runs DeadlineOnline.com, an internet training and consulting firm. He is the author of the bestselling “Find It Online” books.

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