Weekly column in the Washington Times Communities by Laurie Edwards-Tate

Findings from a newly released report show the U.S. Department of Labor has grossly underestimated the negative impact and overall costs of its proposal to repeal the federal Companionship Exemption, subjecting in-home caregivers to minimum wage and overtime laws.

The report released by the International Franchise Association, Economic Impact of Eliminating the FLSA Exemption for Companionship Services, paints an alarming picture of the future for seniors and disabled adults who need in-home care to live independently, as well as the cost to the thousands of small businesses that provide professional in-home caregivers.

According to home care providers surveyed, nearly one in four seniors currently receiving private duty home care would be forced into institutional care or into the underground employment market due to increased costs and interruptions to their care; much of the cost burden would then fall to the taxpayers.

Yet the Labor Department stubbornly refuses to acknowledge that there would be any increase in seniors or the disabled being forced into institutionalized care as a result of the increased costs of home care.

Study authors Jeffrey Eisenach, adjunct Professor at George Mason Law School and Managing Director and Principal at Navigant Economics; and Kevin W. Caves, Director at Navigant Economics, say if the proposal to repeal the Companionship Exemption is implemented as planned, the quality of care as provided will suffer and the financial impact will devastate seniors as well as the in-home care industry.

Eisenach and Caves report the Labor Department understated the amount of home care that would be covered under overtime laws, which the authors found would be three times greater than estimated. Eisenach and Caves write, “(The report) suffers from (other) analytical shortcomings, including improperly characterizing the likely effect of repeal on the quality of care; ignoring the likelihood of shifting consumers from home care into institutions and the disproportionate effect of repeal on special needs populations; and, failing to consider regulatory alternatives, such as continuing to allow states to regulate minimum wage and overtime provisions.”

The authors write that the Labor Department’s analysis “is based on a paucity of data and factual information, even about such fundamental issues as the number of employees and consumers potentially affected, and relies instead on speculation and unfounded assumptions which are systematically biased to understate the costs of the proposed rules.”

As a result, the impact to families and home care workers would do significant harm.

Among the report’s key findings:

  • The Labor Department underestimates the added costs of the bureaucracy needed to comply with new paperwork and human resources requirements, managing new personnel due to changes in staffing limitations, hiring and training, and the cost of paying workers to travel between work sites.
  • Most employers would not pay overtime; they would prefer to hire additional part-time workers at lower wages, decreasing the take-home pay for many current hourly employees.
  • About 75 percent of the home care businesses 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 many caregiver services are not health-related.

The authors recommend that the Labor Department consider additional research prior to any final changes in law.

Families who engage private duty non-medical home care services do so in an effort to keep seniors and the disabled in their own homes as long as possible, reducing costs and delaying any move to assisted living or long-term nursing care as long as possible, while maintaining independence and dignity for their loved ones.

If costs increase due to the removal of the Companionship Exemption, small business owners will be forced to pass them along to their caregiver clients who can ill afford to pay them. It may end up exhausting their financial resources, forcing sale of their homes and a move into institutional care, at which time costs of care would fall upon taxpayers through Medicaid.

The alternative is the danger of engaging caregivers through the underground economy, by private ads or referrals. While the cost can be held down, the senior becomes at risk for physical or financial abuse or neglect. They put themselves at risk from being attended by a untrained person providing care.

Worse yet, some seniors and disabled may reduce or go without home care assistance altogether. Family members may find themselves forced to care for aging parents, leaving the workforce and their own families including children to become caregivers.

The bottom line: these changes will harm the people who depend upon these services the most, America’s seniors. The Labor Department will impose costly, burdensome and completely unnecessary new regulations and costs upon an entire industry and its clients.

The timing could not be worse. As the Baby Boomer population ages, the American home care industry is on the brink of tremendous growth as more seniors engage home care as a cost-effective, humane and satisfying solution to remaining independent. Surveys consistently show that up to 90 percent of seniors prefer to age in their own homes. That growth will be killed if new regulations force seniors to find alternatives.

The Labor Department has extended the deadline to respond to its proposal through Monday, March 12. Comments may be submitted online at www.regulations.gov, or in the mail to Mary Ziegler, Director, Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW, Washington D.C. 20210. All submissions must include the agency name and Regulatory Information Number (RIN) 1235-AA05.

LifeCycles is intended to provide inspiration and information only. If you are considering any health, dietary, exercise or lifestyle changes based on the information provided here, please seek advice from a qualified professional.
Laurie Edwards-Tate, MS, is President and CEO of At Your Home Familycare in San Diego, California. In addition to her positions as entrepreneur, health care executive, educator, radio segment contributor and media guest, Edwards-Tate is also a wife, daughter, and dog lover. Read more  LifeCycles in the Communities at The Washington Times. Follow At Your Home Familycare on Facebook and on Twitter @AYHFamilycare.
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Copyright © 2012 by At Your Home Familycare

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