Affordable Care Act Impact

Effective January 2015, employers are required to provide medical coverage for employees that work 30 hours or more per week with the implementation of the Affordable Care Act (ACA).  Current funding for community residential services (Supported Living, Group Homes, and Children’s Staffed Residential) provides a benchmark from which all direct service wages, taxes, and benefits are to be paid.  Due to two funding cuts over the last five years, the starting wage for direct support professionals is perilously close to minimum wage.

According to the 2015 Developmental Disabilities Administration Residential Staffing Survey:

  • Entry level wage for direct support professionals in Community Residential
    • $10.41 per hour statewide (only 94¢ above minimum wage)

As of 2014, approximately half of the employees in community residential services were provided with medical insurance.  This expense is paid by Supported Living providers out of benchmark funding allocated by the legislature, and is not paid above the benchmark rate, as in Home Care.  With the implementation of the ACA, community residential providers must expand coverage by 68.5% to employees eligible under the requirements of the act.  As is outlined above, the average entry level wage is already near minimum wage.  As such, it is impossible that community residential providers will be able to provide additional medical coverage out of the existing benchmark funding. 

To determine the impact of the ACA on providers, a survey was conducted by the Developmental Disabilities Administration (DDA) of community residential agencies.  From the data compiled, enrollment will be impacted by needing to cover employees working 30 or more hours per week (many agencies currently set eligibility at higher levels, such as 34, 36 or 40 hours per week).  In addition, those employees who previously waived coverage will be mandated to take part in the employer-provided plans.  These ACA requirements will expand the pool of eligible employees by 68.5%.  In addition, the average medical insurance premium annual increase that providers experience is 12%.  This average is commensurate with national averages to medical premium increases in this industry.  Taking into the account the average costs, the average annual increase that providers will experience, and the additional employees being covered, the additional expense equaled $0.77 per hour from the survey data compiled.

A legislative appropriation will be required to ensure that agencies comply with the Affordable Care Act:

  • Annual GF-S Cost = $8M
    • An increase to the benchmark funding of $0.77 per hour will ensure that agencies will be able to provide the required medical coverage to eligible employees. In community residential settings, just under 21M direct support staffing hours are provided annually.

Ensuring that agencies are in compliance with the Affordable Care Requirements is a federal mandate and recognizes the value of service that Direct Support Staff provide.