Within all of health care, home health agencies are among the most likely to be audited by the IRS for non-compliance with the Affordable Care Act (ACA).
That’s true, in part, because of the number of hourly employees and data collection issues in the industry. To avoid scrutiny, agencies need to rigorously check their compliance records and understand what is being asked of them by the federal government, according to compliance experts.
Specifically, under the ACA, it’s important for home health agencies to understand the difference between compliance issues and reporting issues, John Leathers, EVP of product and revenue at Trusaic, said during a webinar Thursday.
“On the compliance requirements side, employers and benefits brokers tend to do a great job of partnering and setting up plans that are compliant with those requirements,” Leathers said. “The problem is that many employers stop there and that’s really only just the beginning. What needs to happen from that point is that each month, the employer is responsible for ensuring that they are correctly identifying all of their ACA full-time employees by applying ACA and IRS measurement logic to their workforce.”
Trusaic is a workplace equity technology company based in Los Angeles.
Home health providers need to make a mindset shift, Leathers said, and understand that compliance and reporting duties are an everyday battle and not something that is wrapped up at the end of the year.
“The reality is, we all know that HR data and the nature of the workforce is a dynamic, living entity,” Leathers said. “Employees are coming in, they’re getting promoted, they’re experiencing lateral shifts, they may be working multiple positions, they’re leading the company — all of that is difficult to capture with 100% accuracy and fidelity as the year progresses. Little data issues day in and day out, week in and week out, accumulate rapidly to create massive headaches by the time you get to the end of a calendar year. By treating this as a monthly process, employers can make sure that they’re correctly identifying issues on more of a real-time basis.”
IRS enforcement of the ACA is ramping up, in part due to legislative changes including the Inflation Reduction Act and American Rescue Plan, according to Trusaic.
Employers who fail to comply with ACA’s employer mandate can face annual penalties as high as $275,000 for every 100 employees.
Some compliance penalties for home health providers can be even more daunting.
If employers fail to offer health coverage to at least 95% of full-time employees each month, they will get hit with a “sledgehammer penalty,” which in 2023 could amount to $3,000 per full-time employee.
For home health specifically, with generally high turnover rates and a unique dynamic of employee types, it can be particularly difficult to wrangle all of the moving parts in compliance.
“[Home health] employees may be working multiple jobs, have multiple job codes and they’re often dispersed at various locations and working at multiple client homes,” Leathers said. “That makes it difficult. Employees on a per diem basis making up a large percentage of the workforce also add complexity to tracking hours of service. Equivalencies need to be mapped, documented and tracked. That adds an additional layer of complexity for home health employers.”
Consolidation of the home health space also can complicate things, Leathers said. Mergers and acquisitions can cause confusion and added paperwork for HR departments once deals get done.
All of these variables make it even more critical that those responsible for compliance are on their A-game when reporting and documenting.
“Home health is certainly — just from an ongoing, day-to-day management perspective — one of the more complex industries because of the nature of the workforce, the nature of the way that employees are compensated, the data and systems challenges associated with all that, and then just the messy nature of M&A growth,” Leathers said.
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