In a new subsidy for the health-care union 1199 SEIU, the Hochul administration is allowing the union’s benefit fund for home care aides to shift some members into taxpayer-funded health coverage through the Essential Plan.

The arrangement appears to sidestep the Essential Plan’s eligibility rules, which normally exclude people with access to employer-sponsored health benefits.

The deal gives a further boost to the 1199 SEIU National Benefit Fund for Home Care Employees, which has been running deficits in recent years despite other subsidies from the state.

Even as some of its members shift to government coverage, the benefit fund can continue collecting employer contributions on behalf of all union-represented workers, according to an auditor’s report attached to the fund’s most recent financial disclosure. By contract, employers pay the fund at least $2.11 per hour of work, excluding overtime, the auditor’s report said.

Launched in 2015, the state-run Essential Plan initially offered low- or no-cost coverage to New Yorkers with incomes up to 200 percent of the federal poverty level. Under an optional provision of the Affordable Care Act, the state collects federal funding for the program equal to 95 percent of the premium tax credits that plan enrollees would otherwise receive. That funding has turned out to exceed the program’s costs, resulting in an accumulated surplus of almost $10 billion.

The offer of coverage to 1199 members coincided with an expansion of the Essential Plan to cover New Yorkers up to 250 percent of the federal poverty level – a change that required a federal waiver and which took effect on April 1.

From March to May, enrollment in the plan jumped 141,000 or 11 percent. That included 132,000 with incomes in the expansion range of 200 percent to 250 percent of the poverty level, which was 53 percent higher than officials projected in December. The number of enrollees from 1199 was not immediately available.

The state’s waiver application made no mention of opening the program to 1199 members or other workers with access to union benefits. However, the fund’s auditor described the expected arrangement in its report dated October 2023:

The Fund has experienced decreases in net assets available for benefits and anticipates low operating cash flows. In June 2023, the Trustees signed a resolution committing to take the necessary actions to address and resolve the funding shortfall. The resolution established a new eligibility class specifically for members that make less than 250% of the federal poverty limit (eligible members). The Fund will coordinate with New York State and expects to move eligible members currently receiving benefits from the Fund into the New York State Essential Plan for the year beginning January 1, 2024. Additionally, the Fund will continue to receive employer contributions on behalf of eligible workers. (Emphasis added.)

The new arrangement is further described on the websites of the benefit fund and of Healthfirst, one of the insurers that offer Essential Plan benefits under contract with the state.

The Healthfirst website specifies that the plan is available to 1199 members making up to $37,650 per year, which is 250 percent of the federal poverty level for an individual.

That figure is less than the median annual wage for home health aides in New York, according to federal data. 

This is far from the first time the state has subsidized benefit funds affiliated with 1199, which is one of Albany’s most influential and biggest-spending interest groups.

From 2015 to 2022, more than $250 million flowed to 1199-affiliated benefit funds for hospital, nursing home and home care workers.

In 2022, the fund for home care workers received $49 million from the state’s Quality Incentive Vital Access Provider Pool, representing a quarter of its revenue for the year.

Offering the Essential Plan to workers with access to employer-sponsored coverage sets a potentially costly and disruptive precedent. If other unions and businesses seek similar accommodations for their lower-wage employees, hundreds of thousands of people could shift from commercial insurance to taxpayer-funded coverage.

Currently, the combined enrollment in Medicaid (7.5 million) and the Essential Plan (1.4 million) amounts to more than half of the state’s under-65 population.