In an unexpected twist for New York’s budget negotiations, state leaders are considering a plan that would sharply reduce wage supplements for home-care aides and redirect the savings to a subsidy for employer-sponsored health coverage.

The plan is backed by the influential health-care union 1199 SEIU, which represents a large share of the affected workers. It also operates a home-care worker benefit fund, which has faced mounting losses in recent years and stands to receive an infusion of cash if the plan is enacted.

For many aides who are not unionized, however, the plan would effectively negate the benefit of minimum wage hikes promised in January 2024.

New York operates an unusually large and costly home-care program, relied upon by hundreds of thousands of frail elderly and disabled people and their families. Most of the funding – for wages, benefits and everything else – comes from Medicaid, a taxpayer-funded safety-net health plan.

Since 2016, the state has required that home care workers in the downstate region – where home care workers disproportionately live and work – receive supplemental compensation on top of the minimum wage. The compensation can take the form of cash or benefits, such as vacation time or health insurance, and it must be worth at least $4.09 an hour in New York City or $3.22 on Long Island and in Westchester County.

According to draft budget language circulating at the Capitol, these required supplements would be cut as of January 2024 by $1.55 each, to $2.54 in New York City and $1.67 in the rest of downstate.

*NSW = Nassau, Suffolk and Westchester counties **Upstate minimum wage subject to change after 2023

The draft language does not specify how much money would be saved or where it would go. Insiders say it would be reallocated to Medicaid's Quality Incentive/Value-Added Provider Pool, or QIVAPP. This program pays extra money to home-care agencies that meet certain criteria – including offering a minimum level of employee health coverage. Most of the agencies receiving this money have collective bargaining agreements with 1199.

Those agencies would be expected to pass along the extra QIVAPP money to their insurance provider – which would mean more revenue for the 1199SEIU National Benefit Fund for Home Care Employees, which it urgently needs.

According to the most recently publicly available reports, that fund sustained an operating loss of $51 million, or 32 percent of revenue, in 2021. Its assets had declined by $117 million or 44 percent over the previous five years.

Over that same period, its membership had also declined from about 33,000 to 25,000, a small fraction of the state's roughly half-million home health aides.

Further complicating the picture is an expected hike in the state's minimum wage, which is currently $15 in the New York City region and $14.20 upstate. Budget negotiators have reportedly agreed on a $1 an hour increase in January followed by 50 cent increases in 2025 and 2026.

Under a separate state mandate enacted in last year's state budget, home-care workers are currently entitled to an extra $2 an hour above the minimum. That premium is due to rise to $3 above the minimum starting in October.

The proposed budget language would replace the home care workers' $1 hike in October with a $1.55 increase in January. In New York City and Long Island, that would precisely offset the $1.55 cut to the wage supplement – meaning the downstate workers' total compensation would stay flat in January at $21.09 in New York City and $20.22 elsewhere downstate.

Under current law, those totals would have risen to $22.09 in the city and $21.22 in the rest of downstate.

In terms of straight wages, home care workers will still be entitled to a higher minimum than the rest of the workforce, but it will be $2.55 higher instead of $3. 

It's worth remembering that most home-care workers make more than the legal minimum, meaning that a change in the minimum does not necessarily result in a dollar-for-dollar change in their pay. Still, a cut to wage supplements is likely to translate to a effective loss for some workers – and indirectly their clients.

Because the 1199 proposal involves reducing a wage supplement workers have been receiving for six years, the proposal could alienate some progressive groups and their allies in the Legislature who have campaigned to dramatically increase compensation for home care workers.

Because it tends to favor unionized agencies and workers, it could also face blowback from portions of industry that are largely non-unionized, including the Consumer-Directed Personal Assistance Program that has exploded in popularity over the past decade.

As the proposal gets more public discussion, it will be interesting to see how rank-and-file lawmakers navigate a divisive debate.