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.


About the Author

Bill Hammond

As the Empire Center’s senior fellow for health policy, Bill Hammond tracks fast-moving developments in New York’s massive health care industry, with a focus on how decisions made in Albany and Washington affect the well-being of patients, providers, taxpayers and the state’s economy.

Read more by Bill Hammond

You may also like

How a Medicaid ‘Cut’ Could Lead to More Unionization of Home Care Aides

A money-saving maneuver in the newly enacted Medicaid budget could end up increasing costs in the long term – by paving the way for more unionization of the state's burgeoning home health workforce. Read More

Budget Deal Slows Medicaid Growth But Plants Seeds for Future Spending

The growth of New York's Medicaid spending is projected to slow but not stop as Governor Hochul and the Legislature effectively split their differences over health care in the newly enacted state budget. Read More

Albany’s New Health Insurance Tax Comes with Few Limits

The newly enacted state budget imposes a multibillion-dollar tax on health insurance without specifying who must pay how much – leaving those basic details to be decided later by the health commissioner in negotiation wit Read More

One of New York’s Biggest Medicaid Contractors Is Quietly Acquiring a Competitor

Author's note: This post has been updated to correct an error in the second paragraph. As state lawmakers debate the future of Medicaid home care, one of the program's bigg Read More

New York’s Home Health Workforce Jumped by 12 Percent in One Year

New York's home health workforce has continued its pattern of extraordinary growth, increasing by 62,000 jobs or 12 percent in a single year, according to newly released data from the U.S. Bureau of Labor Statistics.  Read More

While New York’s Medicaid Budget Soared, Public Health Funding Languished

Four years after a devastating pandemic, the state has made no major investment to repair or improve its public health defenses. While funding for Medicaid over the past four years Read More

A Medicaid Grant Recipient Sponsors a Pro-Hochul Publicity Campaign

While much of the health-care industry is attacking Governor Hochul's Medicaid budget, at least one organization is rallying to her side: Somos Community Care, a politically active medical group in the Bronx that recently r Read More

A Politically Active Medical Group Gets $29 Million in ‘Distressed’ Provider Funds

State officials awarded $29 million in 'distressed' provider funding to a politically active medical group in the Bronx, state records confirm. a network of physicians and other he Read More