Introduction. HOW you do things, it is said, is as important as WHAT you do. Operating a Fiscal Intermediary (“FI”) under New York’s Consumer Directed Personal Assistant Program (“CDPAP”) epitomizes this. Do you know the difference between operating as a “Fiscal/Employer Agent” and an “Agency with Choice”? Do you know how to incorporate the Wage Parity Act (“WPA”) into your wage and benefits package under CDPAP? The risks for getting it wrong are enormous. Here is a summary of what you need to know. Our goal is to teach how to get it right, with all the agreements, documents, and consumer orientation materials you need.
How do You Choose Between a “Fiscal/Employer Agent” and an “Agency with Choice”?
You choose or the choice is made for you. If you do not set yourself up to operate as a Fiscal/Employer Agent, you will likely default to being an Agency with Choice. An Agency with Choice is a joint employer with the consumer of the consumer’s personal assistants. A Fiscal/Employer Agent is not. Beginning October 13, 2017, you must add a WPA Package of benefits or additional wages ($4.09 in NYC/$3.22 in LI and Westchester) to minimum wage rates. Use this introduction of the WPA Package as an opportunity to choose the Fiscal/Employer Agent model.
Fiscal/Employer Agent Model. The consumer is the sole employer of his or her personal assistant(s) and has total freedom of action and choice in whom to employ, where and when to receive services, how they are delivered, and how much to pay in benefits. You are only a payroll and benefit administration company. You are not in charge of a consumer’s care. If you operate correctly as a Fiscal/Employer Agent, you do not take on any liabilities that you cannot control, such as unpaid wages for hours worked and overtime you did not know about, personal injury liability for the consumer and others, and penalties for not providing health benefit coverage under the Affordable Care Act. Also, because NYC has a two-tier minimum wage schedule until 2019 and a consumer with less than 11 employees in NYC is considered a “small employer,” the “total compensation” due the consumer’s personal assistant(s) is only $14.59 per hour until December 31, 2017 under the Fiscal/Employer Agent Model, as compared with $15.09 under the Agency with Choice model, where the agency is considered a large employer. This year, the minimum wage for a consumer’s personal assistant is $.50 lower for a small employer than for a large employer, $1.00 lower next year, and $1.50 lower the following year. This can enable you to take cases where the managed care reimbursement rate would otherwise be too low to take the case.
Agency with Choice Model. You and the consumer are joint employers of the consumer’s personal assistants. Even though you do not receive the consumer’s plan of care, or hire, fire, train, schedule hours or decide when or where services may be rendered, in a home or car or anywhere else, you are jointly and separately liable for how the consumer’s personal assistants perform their services and any hours worked and unpaid and overtime unpaid. Because past and present liability for 24- hour cases is still unsettled, and the ten largest shareholders of a non-publicly held corporation in New York can be held personally liable for unpaid wages and benefits, this is particularly troublesome. This, alone, is reason enough not to be an Employer with Choice.
How Do You Provide the WPA Package Under the Fiscal/Employer Agent Model?
Types of benefits. To attract cases, you want to provide benefits that personal assistants want to receive. Benefits that are not taxable to personal assistants are the obvious choice. For example, if a consumer allocates $1.00 per hour to a pre-tax transit plan, a personal assistant working 40 hours per week, in a 30% tax bracket, can receive a $121 monthly Metrocard tax-free, whereas the personal assistant would have had to earn $173 in order to have, after taxes, the $121 necessary to buy the card herself — a $52 per month saving! Another desirable benefit is a Qualified Small Employer Health Reimbursement Account (“QSEHRA”), which only became available this year. A personal assistant who purchases a subsidized health plan on the NYS Health Insurance Exchange (https://nystateofhealth.ny.gov/) can be reimbursed tax-free for the premiums they pay by allocating part of their $4.09/$3.22 Package to this benefit. Open enrollment for Exchange plans for 2018 is November 1, 2017 to January 31, 2018, just in time for personal assistants to apply. For those who need health insurance because their wages, with minimum wage increases, will make them ineligible for Medicaid, this can be a great benefit. Other pre-tax benefits that can be made available include dependent care, whether for child or elder care, and educational benefits for personal assistants to continue their education or learn new skills.
Designing and Delivering the Benefits. Here is where “HOW” you do it becomes so important. Tax-free benefits must meet Internal Revenue Code, ERISA, and WPA requirements. If you do not want to be considered a joint employer of a consumer’s personal assistants, do not sponsor a “cafeteria plan,” do not cover pre-tax benefits through a funded trust to which you contribute amounts per hour, unless it is properly constructed and qualified by the Internal Revenue Service as a “voluntary employees’ beneficiary association”; and do not pay exorbitant administrative fees for delivering benefits. Auditors from the NYS Medicaid Inspector General, NYSDOL and IRS will scrutinize administrative fees, among other things, to see how much of the WPA Package is actually reaching personal assistants. Plaintiffs’ attorneys are already bringing WPA cases, suing for failure to pay the full Package.
How Do You Orient a Consumer Under the Fiscal/Employer Agent Model?
Have a system in place for enrolling (or re-enrolling with the added WPA Package) consumers into your Fiscal/Employer Agent, which includes an orientation script that protects you against claims of joint employment, and all 21 agreements and documents to be used with the consumer or the personal assistant during the orientation, with you as the consumer’s agent for this express purpose. Don’t “set the wage rate” or determine the benefits package for personal assistants. Place wage and pre-tax benefit choices in front of consumers, and let the consumers decide on their own which they want to give their personal assistants. Also allow consumers to choose to give taxable benefits allowed under the WPA, such as more rest or sick days than those required by the NYS Domestic Workers Bill of Rights and the NYC Earned Sick time Act.
If you have any questions regarding this Alert or would like our advice of your home care agency’s particular facts and circumstances, please contact the author, Stephen Zweig, Partner in FordHarrison’s New York City office and head of the firm’s Home Care Industry Group, who has counseled and defended home care agencies for over 35 years, at firstname.lastname@example.org, or (212) 453-5906, or the FordHarrison attorney with whom you usually work.