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In August, the State Department of Health launched the Health Care Worker Bonus Program (HWB) aimed at rewarding and retaining frontline healthcare and mental hygiene workers. As with any new state program, many questions arise. Below, we answer the most frequently asked questions from our clients.
What is the New York State Health Care and Mental Hygiene Worker Bonus Program?
The HWB Program is a state-funded initiative that requires “qualified employers” to pay bonuses to “qualified employees” who earn less than $125,000 annually and remain in their positions for at least six months. Payments are based on the number of hours worked and duration of service within designated “vesting periods” for a maximum of $3,000 per employee.
Who is a “qualified employer?”
Qualified employers include employers with at least one employee and that:
- bill for services under the Medicaid state plan;
- bill for services under a home or community-based services waiver; or
- have a provider agreement to bill for Medicaid services provided or arranged through a managed care organization or a managed long-term care plan.
Certain educational institutions and other state-funded programs are also included as qualified employers.
Who is a “qualified employee?”
A qualified employee must work for a qualified employer and be considered a "front line health care and mental hygiene practitioner, technician, or assistant and aide that provide hands on health or care services to individuals.” See the list of eligible worker titles.
How does the process work?
Qualified employers enroll online to claim bonuses on behalf of their employees. Both the employee and employer are required to complete attestation forms confirming eligibility. Claims are submitted for each vesting period as detailed on the DOH website.
What effect does this have on our retirement plan?
Employee deferral elections, employer matching contributions and other employer non-elective contributions are allocated based on the plan’s definition of compensation. The HWB payments are considered wages to be included on the employee’s W-2. If your plan’s definition of compensation does not exclude bonuses, the HWB earnings must be included when calculating employee deferral withholdings and/or employer contributions.
What if our plan’s definition of compensation includes bonus payments, but we do not want HWB included in plan compensation?
In the absence of any official guidance from the IRS, plan sponsors who neither want to alter their current definition of compensation nor include the HWB payments as part of plan compensation can adopt an amendment to exclude this specific HWB payment from the definition of compensation. Before any amendment is executed, be sure to consider any potential adverse effects on nondiscrimination requirements.
HANYS Benefit Services is a marketing name of Healthcare Community Securities Corporation, member FINRA/SIPC, and an SEC Registered Investment Advisor. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice.