Skip to main content

How the NYS Health Care Worker Bonus Program Impacts Employers

Image of 7 healthcare workers

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.

Popular posts from this blog

What are Alternative Investments? 4-Part Introduction

The market has seen a lot of uncertainty in recent years. Because of this, many organizations are looking for new ways to diversify their investment portfolios. Our best-kept “not-so-secret” secret: alternative investments. In this blog, we'll explore alternative investments with a focus on how they can potentially shield your portfolios from downside market volatility. In addition, we'll break down its benefits and risks and whether it could be a good fit for you. Part 1: What are alternative investments? Alternative investments may help diversify your investment portfolios through non-traditional investment strategies. Non-traditional investment options have varying liquidity ranges depending on the strategy and fund structure. Alternative investments are sometimes referred to as alternative assets. According to the Harvard Business School , the seven types of alternative investments are: private equity; private debt; hedge funds; real estate; commodities; collectibles; and s

Section 125 – Cafeteria Plans Overview

A Section 125 plan, or cafeteria plan , allows employees to pay for certain benefits on a pre-tax basis. Employers use these plans to provide their employees with a choice between cash and certain qualified benefits without adverse tax consequences. Paying for benefits on a pre-tax basis reduces the employee’s taxable income and, therefore, reduces both the employee’s and the employer’s tax liability. To receive these tax advantages, a cafeteria plan must comply with the rules of Section 125 of the Internal Revenue Code and related IRS regulations. Under these rules, a Section 125 plan must have a written plan document and can only offer certain qualified benefits on a tax-favored basis. Once an employee makes a Section 125 plan election, they may not change that election until the next plan year, unless the employee experiences a permitted election change event. Also, for highly compensated employees to receive the tax advantages associated with a Section 125 plan, the plan must pass

5 Top reasons to offer employee mental health benefits

In fast-paced and demanding work environments, the importance of employee mental health benefits cannot be overstated. Employees who are mentally well are more productive, engaged and satisfied with their jobs. Mental health treatment, including therapy, medication and self-care, can help people who are experiencing mental illness. However, taking that first step toward recovery or seeking help can be challenging. The National Alliance on Mental Illness’ Mental Health By the Numbers finds that the average delay between the onset of mental health symptoms and treatment is 11 years. Factors such as cost, access and stigma can hold workers back from receiving the mental health support and treatment they need. However, there are employer solutions that can help employees overcome these barriers, understand available treatment options and start their recovery journey. This article explores barriers to mental healthcare and ways employers can help break them down to support employees holist