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#65 Many home care agencies don't realize they've crossed the Affordable Care Act threshold until the IRS comes knocking. Brendan Mullins, CRO of Vitable Health, explains why agencies with as early as $1–2M in annual revenue can already qualify as Applicable Large Employers, how 30 hours per week (not 40) triggers eligibility, and why variable caregiver schedules make ACA compliance especially difficult. We break down how the 50 Full-Time Equivalent (FTE) threshold is calculated, the misconceptions that lead agencies into trouble, and why penalties can quickly climb into the six figures. Brendan also walks through how ACA audits typically unfold, why compliance issues often surface years later, and the common mistakes agencies make along the way.
Creators and Guests
What is Home Care Strategy Lab?
Is there a single right way to run a home care agency? We sure don’t think so. That’s why we’re interviewing home care leaders across the industry and asking them tough questions about the strategies, operations, and decisions behind their success. Join host Miriam Allred, veteran home care podcaster known for Home Care U and Vision: The Home Care Leaders’ Podcast, as she puts high-growth home care agencies under the microscope to see what works, what doesn’t, and why. Get ready to listen, learn, and build the winning formula for your own success. In the Home Care Strategy Lab, you are the scientist.
Miriam Allred (00:11)
Hey everyone, welcome back to the Home Care Strategy Lab. It's your host, Miriam Allred. It's great to be back with you. I hope everyone's having a great week. Today in the lab, I am joined by Brendan Mullins, the CRO of Vitable Health. Brendan, welcome to the show.
Brendan Mullins (00:25)
Thank you for having me. It's great to be here.
Miriam Allred (00:27)
It's great to have you. I'm excited for this conversation. I told you I interviewed Joe last year, but it's been a while, and this topic is super important. And it's one of those things that I don't think enough people are thinking about, let alone talking about. And in this AI world, I wanna, I guess, just praise you guys in building something really tangible, meaningful, kind of basic or essential in the best way. And so like to kind of surface these conversations when I think everyone's kind of tapped out of AI. Not saying you're not using AI, you probably are, but
Something a little more like hands on and tangible. So excited to have this conversation.
Brendan Mullins (00:59)
Me too. Thank you.
Miriam Allred (01:01)
Let's start with your background. Tell everyone a little bit about yourself and then do kind of a quick intro of Vitable as well.
Brendan Mullins (01:06)
Yeah, sure. So I'm Brendan Mullins. like you said, I ⁓ am the CRO at Vitable Health. I've been here just about two years. ⁓ I have been in the health and benefits industry for the last 20 working for a lot of probably the big brand names that you've heard and came to Vitable because I really I just got kind of got tired of like selling a thing and really wanted to do something different and actually help people.
And for me, you know, knowing this industry as well as I do, it's very tough to negotiate. It's very tough to navigate. ⁓ and often you don't feel like you're actually helping people, even though you might have set out to do that. So for me, Vitable was a really strong choice because I I think we have the best mission and I think we are really focused on, you know, actually doing something good for people. ⁓ personally, grew up in New York, live in San Francisco. I always say I have that, you know, cold, dark heart of a New Yorker inside that I present in a very
Miriam Allred (01:56)
Yeah.
Brendan Mullins (01:58)
fluffy and warm exterior. ⁓ but I've been very fortunate to have almost about twenty five years in both. So it really I think ⁓ big part of me but love living in the Bay Area now, which is where I'm at. So yeah.
Miriam Allred (02:10)
Amazing. Amazing.
And two years at Vitable. Give everyone just kind of a teaser of Vitable and then we'll talk more about it at the end.
Brendan Mullins (02:16)
Yeah, so Vitable helps employers offer affordable health care benefits, ⁓ especially to hourly workers where they might have trouble, you know, affording the company health plan and maybe they're stuck in this limbo where they almost make a little too much to go get government assistance. And so we offer a wide variety of different health care benefits that are tapered to that sect of people. ⁓ and we combine primary care with preventative care ⁓ and offer ACA compliant health plans.
Miriam Allred (02:45)
Amazing. Let's start by talking about ACA compliance. I hope us talking about this, it's not anything new to anyone listening to this, but I want to just kinda like set the record straight and give everyone just like a quick refresher. give us a kind of a brief background of the ACA Affordable Care Act in a nutshell.
Brendan Mullins (02:48)
Favorite.
For sure. Yeah,
you know, my favorite topic. And it's it's so funny. I'll start Miriam by saying that I was on ⁓ a call with a customer yesterday and I said, we can go as deep as you want to go, right? We could start off here, but with the ACA, there is always another but or another and or another thing that we can talk about and add on because it can get very complicated. ⁓ ACA, ⁓ you know, you said hey, most most people are aware of this. Shockingly a lot are not.
Miriam Allred (03:05)
Mm-hmm.
Brendan Mullins (03:32)
So we work with you hundreds and hundreds of home care agencies, and often a lot of people don't understand ACA and what they have to do to be compliant, or you know, are required to provide health care and don't. So, broad overview, ⁓ the Affordable Care Act, or as many people know it as Obamacare, ⁓ was passed in 2010. And this was you know passed with the goal of expanding health care to really everybody. And at the time that came out, there was an employer mandate where it said, hey,
If you have over a certain amount of ⁓ full-time equivalents, you will have to provide health insurance. And at the time, which is no longer active, it said if you are an individual and you don't have health insurance, you are going to be fined at the end of the year. That piece eventually was repealed, except in a few states, I think like Vermont and one or two others, maybe DC. ⁓ but today, as it stands, there is now only that employer mandate where if you are an employer,
And you have more than fifty full time equivalent employees, we can talk about what that definition means, you have to supply healthcare. That's that's the very base level. We can go deeper from there, but that's where we are today.
Miriam Allred (04:46)
And you mentioned that there's a lot of layers. This is this was back in twenty ten when this is passed. Like any legislature, there's just like iterations and layers and changes. Do you feel like it's still relatively similar at its core to what it was, or it's changed drastically and is basically something entirely differently today?
Brendan Mullins (04:51)
Yeah.
biggest change is that individual mandate went away. So, you know, technic technically, if you don't have health insurance as an individual, you are breaking the law. However, there's no more fine associated with it. And so that really is what changed it. I would say overall. Now, in the last, you know, I would say a couple years, there's been a lot of uncertainty what'll happen with it. And we saw as we were heading into 2026 with the one big beautiful bill.
There was a lot of talk about, hey, what's gonna happen? Are they going to cut the subsidies that those plans were offering in in the marketplaces? will it go away entirely? Will it ⁓ you know, ⁓ shift to different products or try to push people into different ⁓ you know, new parts of ⁓ healthcare product? And in reality what we saw was not a tremendous amount of change. ⁓ I would say that, you know, we if if anything with current administration, this is the administration that would
try to dismantle it the most and we still haven't seen much dismantling of it. I think what they see is there's a lot of usage ⁓ of the ACA. And because of that, you know, there's really not many administrations that want to touch it at this point because so many people are getting healthcare through it.
Miriam Allred (06:20)
Okay, that's what I was gonna say. We're halfway through twenty twenty six and nothing major has changed, so it's likely here to stay.
Brendan Mullins (06:26)
I think it's here to stay. I w you know, it's it's changed a little bit over time and I would expect it to continue to iterate. But as far as right now, if if we haven't seen massive changes today, I would be shocked if we see something over, you know, these next couple of years, honestly.
Miriam Allred (06:41)
Okay. And it was interesting to hear you say it's not uncommon for p employers not to know about this. Why is that? Why why don't people know about it?
Brendan Mullins (06:50)
I Miriam, I don't know. You know, it's it's it's 16 years of ⁓ being out there. And I think everybody when you say the term Obamacare, everybody knows, yeah, that's ⁓ healthcare out there that I've got to get. But when we talk to ⁓ home care agencies, at the end of the day, a lot of them aren't aware. And I I think it's you know, here's the deal a lot of home care agency owners don't get into home care because they wanna go learn every detail about healthcare.
Miriam Allred (06:51)
Yeah.
Brendan Mullins (07:20)
They get into it because they want to help people or they want to, you know, go into a business that makes a lot of sense for them or, you know, fits their lifestyle or whatever it is, when they get into it, they're not handed this big book of here's all the regulation that you need to go through. And I think because of that, they sometimes just don't know. But it's it's a lot more common than you would think.
Miriam Allred (07:38)
Yeah. And even if they are handed a big book of regulation, they're not reading it. You know, like not to knock on anyone. It's just there's other like you said, there's other priorities, there's other focus, there's a reason why they're getting into this business and it's not for this. But also hence why we're having this conversation. It is extremely important and it needs to be understood. And I and that's why I want to kind of like beat this drum of like everyone needs to understand. So we're gonna get into the details of how to calculate this, what to do, what to do, what the audit looks like, all of that. But let's just start with.
Brendan Mullins (07:42)
Right.
No
True. Yes.
Yes, yes.
Yeah, yeah.
Miriam Allred (08:05)
You kind of reiterating what is required of employers under ACA? What do they have to offer? What do they have to do?
Brendan Mullins (08:12)
Yeah, so let's let's start with 50 full-time equivalents is the number that you have to have in your head. And so a lot of home care agency owners will say, okay, well, you know, I don't have 50 full-time employees. I've only got 30, and the rest are all part-time. But the key word there is equivalence, right? And so the government isn't looking at your full-time. What they're doing is they're taking all of your full-time employees, they're counting them, and then they're looking at a calculation of all of the hours that you're
part-time employees are working, totaling that up, putting them together, and saying, okay, you are or are not over that 50. And so if you fall on the threshold where now you have 50 full-time employees, you have to do two things. You have to go offer health insurance, and that health insurance has to fit in the guidelines and have the criteria that the government has outlined. That is usually tied to a certain metal level plan.
Which is usually like a s the lowest silver plan in your area, is what you can offer. and then second, you have to make it affordable for them. And so, you know, you could say, hey, what does affordable mean? Well, it's actually outlined. So ⁓ this year in 2026, it's nine point nine six percent is the number. You cannot offer them a healthcare plan that costs them more than nine point nine six percent of their overall pay.
So if the plan that you offer is more expensive than that, you actually have to subsidize it for them. And so those are the two different parts of the legislation. And there's different fines and penalties for both. Does that make sense? Yeah.
Miriam Allred (09:53)
Yes. Okay. Let's talk about both. This is super interesting. I love this.
Okay, let's give a let's give a tangible example of an agency that has about a hundred employees and that's gonna be mixed full time, part time. Can you kind of walk through the math of an agency? A hundred employees, we're looking at the numbers vary, but a like a two to five million dollar agency can be in that like hundred employee range. Talk about how they would calculate it for a hundred employees that are again full time and part time mixed.
Brendan Mullins (10:13)
Sure, yeah.
For sure. And this is you before when I was talking about we can keep going and going, I always try to explain this without like drowning people in the knowledge because eventually you walk away and they're just looking at you like just kind of scared at a certain point. So ⁓ let me I'll try to make it as clear and as simple as possible. So in that case, let's say you have a hundred employees. Let's say twenty of them are full time, and full time is not forty hours a week, it's thirty hours a week. That's what they count. So it's thirty hours a week is what's considered full time.
And so you take those 20 that you already know are full time, and we're gonna put them in one bucket. And then for those other 80 that are part-time, you're gonna take all of the hours that they work in a month. If anybody is working over 120 hours in a month, you're gonna cap that number at 120. You add it all up, and you divide it by 120. That 120 is 30 hours a week over four weeks.
whatever that number turns into, then you are going to add that to your full-time employee count. So maybe after that calculation, what you realize is okay, this equated to 30 employees. I put that on top of the 20 full time I have. Guess what? I'm now an applicable large employer because I have 50 full time equivalents. Does that make sense? Okay.
Miriam Allred (11:39)
That's perfect. That's perfect. That's simple math
that everyone listening to this can do. Do are people relying on payroll software or HR software? Or or is there anywhere that's calculating this for them or it has to be a manual calculation?
Brendan Mullins (11:52)
So actually we we will do that for you. ⁓ there are a lot of people use payroll companies to do that. I've seen ⁓ you know, spreadsheets, I've seen them doing it manually. The biggest, unfortunately, the biggest thing that we see is they just don't calculate it correctly. ⁓ and so if you are not setting that up with your payroll company or you don't have some other, you know, software or something to do it, nine times out of ten it's probably not right because
Again, the different level levels of depth. Yes, you have to calculate that, but there's also something we call a look back period, where in your business, you're going to set up a look back period typically anywhere from three to twelve months. And that's the period you're going to look back to see who qualified for that healthcare and who you know ended up being a full-time equivalent. and so if
If you can't track the hours in that look back period correctly, you run the risk of not offering the right people health care, which means that you're at risk for a fine. So it gets again, a little bit more complicated.
Miriam Allred (13:00)
So when you say a three to twelve month look back, what should they use? Should they use the three to twelve month or where what number should they pull?
Brendan Mullins (13:09)
This is where I'm always conflicted because I'll tell you why. ⁓ you know, we we run into so many different home care agencies with so many different situations, and the reasons why they want to offer healthcare varies. ⁓ one of the biggest reasons is they have to, right? They they just want to be compliant, but we also know sometimes that home care agencies are running on smaller margins and they can't necessarily afford to start going out and putting, you know, all of these people into healthcare plans, and they might run a 12-month look back.
Miriam Allred (13:11)
Okay.
Brendan Mullins (13:40)
Because for that first 12 months, they technically would not have to offer the healthcare if they have somebody that you know is is part-time and they they are probably not eligible. At the 12 month mark, they would go back and look and say, did they work enough hours? And then they would be required to offer them health care because they qualified during that look back period. Why home care agencies do this is because if they are really thin margin.
They know that there's a tremendous amount of turnover in the industry and a lot of people won't last a year. So what they're doing is really ending up offering the healthcare to the people that are staying and they want to keep. The second angle on this is we run into a lot of home care agencies that really, you know, might have the ability to offer healthcare and they want to do the right thing for the employees. they also might be in a really competitive environment where they're trying to recruit people, they're trying to retain them, and they know that, you know, one of their caregivers might go across the street for
Who knows, a little bit more in their paycheck or an extra benefit, that's where they're probably gonna offer a much shorter look back period, maybe a month, where we're gonna look back, see if you ran the hours, and then quickly provide you healthcare so that you know we're kind of locking you down and making you feel like we've really given you some kind of great benefit. So it's it's really about individual situations, I would say. Yes, yes.
Miriam Allred (14:55)
Okay.
Got it. Okay. This is getting a tad hairy, but this is good.
when does the IRS come knocking and do they decide the look back?
Brendan Mullins (15:07)
So no, you will state the look back. you will you will set up that you know for your own and go back and look through that period. The IRS comes knocking, ⁓ I would say at all different times, as the IRS likes to do. what I would say is ⁓ even if you think you're out of the woods, you might not be out of woods. And all of a sudden you're gonna get a letter from 2022, right? Where you're just like, my gosh, I thought this was already done. No.
Miriam Allred (15:20)
Okay.
Brendan Mullins (15:36)
They are just catching up to, you know, the year that they sent you the letter for. What I what I know is the IRS has gone through, you know, reductions in staff related to ⁓ basic like processing, where they've added staff is in areas where they can collect fee revenue or fine revenue. And so in areas like this where they can go in, you know.
Create fines, or another big is like the 1099 versus W2. If you've misclassified that, it's another one for a while they were putting a lot more inspectors into. ⁓ what what they're doing is is obviously employing people where they can go find money. In this case, we're seeing more fines, I would say, over the last couple of years, because of that, but also because the technology is so much better. And so it's a lot easier for them to figure out ⁓ if you didn't supply healthcare.
Miriam Allred (16:25)
Mm.
Brendan Mullins (16:32)
And the biggest way that's going to show up is if you are not offering healthcare and one of your employees goes to the exchange to get healthcare when you should be offering it. It's gonna trigger an investigation. They will go back and look and say, okay, why is this person, you know, coming to us to get a healthcare plan or a subsidy? And we need to go and look at that business. And that's where all of a sudden they start coming knocking.
Miriam Allred (17:01)
Got it. Okay. Wow. I think like to these home care leaders listening to this, like sleep with one eye open, but ⁓ what a what a ball of stress to think that like they could come come at you today for something years in the past. Like, my gosh, that's such a nightmare. Okay, but that was perfect. I wanted to know what the triggers are. So if if one of your employees goes out to the exchange, boom, red flag goes up. Are there any other kind of common red flags that employers should just be aware of?
Brendan Mullins (17:16)
There's a person down.
no. I I and I can explain, you know, a little bit of the difference on the different fines because I think it's important to know. But the biggest one is is them going and getting, you know, their own their own plan. But they will just also audit businesses for, what they think are probably clear applicable large employers that have not reported that they have health care. Yeah.
Miriam Allred (17:39)
Okay.
Okay. Which
is why a lot of these probably two to five million dollar businesses just think they're flying under the radar and it's worth the risk and the IRS hasn't come knocking yet, therefore they're not doing anything and that's the trap. And it's like, avoid that at all costs. I was gonna ask about like filing your taxes, you know, when these when these companies file taxes, I feel like there's usually reporting around health insurance and benefits and all of that. Like is the IRS also keeping an a close eye on like the taxes and the tax reporting and this is where that could show up, or am I wrong?
Brendan Mullins (17:57)
Yes.
so they have to file a ten ninety-four and a ten ninety-five. ⁓ I don't see as much related to that. but I'm I wouldn't be surprised if they look at that. Kind of like I was saying, if they can understand that the business has X amount of revenue, they probably need a certain amount of people. They can make that connection and and maybe that's one of the ways they would dive in, but I just can't confirm it.
Miriam Allred (18:36)
Okay,
that's that's fine. Just was curious if that was kind of another trigger, but it sounds like people going out to the exchange. And so that's definitely something that employers can be aware of. Again, employees can go out and do whatever they want and employers may or may not know if they're doing that, but that seems like one that they could identify if they tried.
Brendan Mullins (18:56)
Right. And they can't discourage them from doing it if they're not supplying health insurance. But I will say, and something you just said made me think of this, you know, ⁓ the the the sleeping with one eye open. We also see a lot of employers that I think have sold themselves that they're doing something that qualifies when they're not. And probably the biggest one is they will interpret the law as, okay, I have to offer health care.
And we'll hear them say, Well, hey, I went around and I offered it to all my people and they didn't want it. And it's not like walking around and just auditing the team and saying, Hey, would you guys like healthcare someday? You know, they they're gonna say, no, I'm good. You literally have to go buy a plan, put it together, offer it to them, and show proof of that. Going and just saying, Hey, you know, ⁓ do you guys want this? Doesn't work. And the other thing that doesn't work is, hey, I put a little bit more money in their paycheck for it so that they can go buy it on their own.
Miriam Allred (19:33)
Yeah.
Brendan Mullins (19:53)
Doesn't work.
Miriam Allred (19:54)
I think you just caught a lot of people red handed because most people are doing one of those things and I have heard that out of people's mouths.
Brendan Mullins (19:56)
Well yeah. And like I said.
Yeah, and they and they w have convinced themselves that they're gonna be fine. And guess what? When that fine comes, it's actually it's worse because maybe you have been putting more money in people's paycheck and not only are you gonna pay that, but you're gonna go pay that fine as well, which is just, you know, double double whammy there. So
Miriam Allred (20:19)
Yeah. Okay. So we're going to get back to this, like what employers should be doing. But I want to circle back to this has to be affordable. What you're offering them has to be affordable. That's the purpose of this. And that's also like the linchpin. And you said that 9.96% of their income. So that is that is a threshold that the IRS has given us. And that's probably also a common pitfall of where employers are thinking, we're offering them something, but it's not.
Brendan Mullins (20:36)
Yeah.
Miriam Allred (20:47)
good enough and it's not actually meeting the threshold. So a lot of people could be out there offering things that actually just don't comply.
Brendan Mullins (20:54)
I've seen that too, right? And you know, you you do have to ask the right questions. I've seen people that have been sold into plans from ⁓ you know, other healthcare companies or insurance brokers that don't fit the qualification and they think they're covered, but it doesn't. ⁓ and I've seen them set it up in ways where, you know, it doesn't qualify. And I've seen them pay, we were talking before about calculating the hours. I've seen them pay for services where it calculates the hours, but it's wrong.
And so it's really it's it's unfortunate, it's very confusing for like the the business owner.
Miriam Allred (21:26)
Yeah, well, and it's there's a lot of complexity to that. I literally I'm just thinking in my head of the nine percent multiplied by every single employee and doing that math. It's like I read somewhere else, you know, the plan must cover about like 60% of their expected healthcare costs. Is that I don't know if that's 60% is a generic number or a hard number, but something about it covering like a good portion of their anticipated healthcare costs.
Brendan Mullins (21:45)
Yeah.
Yeah, exactly. There are like the rules on what the plan has to offer are pretty, ⁓ laid out. And you know, as I I said it before, but a little bit more explanation. Most healthcare plans are rated like bronze, platinum, gold, silver. And that sixty percent when you have a silver plan, it almost equates exactly to that. And so
what the minimum plan you can usually offer in a market is that lowest cost silver plan in the market that's available and that will cover sixty percent and will will ⁓ qualify for you know ACA compliance.
Miriam Allred (22:31)
Okay, that's a great nugget. You know, everyone's
seen those different like, you know, tiers and it's to me it's just ambiguous. Like obviously platinum and gold like, you know, in my I'm like, it's just like a ranking system, but actually it's based off of like anticipated healthcare costs. That's really good to know. And the silver is like the bar.
Brendan Mullins (22:39)
Right.
Yeah. Yeah, it's not tied directly to the anticipated healthcare cost, but it's it's a good equivalent, I would say. Yeah.
Miriam Allred (22:51)
Okay. Okay.
I don't want to lean too much into the scare tactics, but I want to really make sure we also nail the penalties because this is no joke. Like this is people should not be messing around with this because these penalties are steep. And so can you reiterate the different penalties and what those triggers are for these penalties?
Brendan Mullins (23:09)
Okay, so you have two parts. So there's part A, and this is you have to supply healthcare. And this is the big fine. Okay, so if they figure out that you don't you aren't supplying healthcare, they are gonna look at the entire population of people that should have been supplied healthcare, and they will fine you based on the amount of employees that you have in that. The fine
Off the top of my head, it changes every year. I believe right now it's about $3,340 per head. So let's say, in the case that you've got, you know, a hundred people that should have been offered healthcare, you're gonna go and do what $300,000 some odd dollars in fines. Now, they do give you one break, which is the first 30 people aren't gonna count. So they will waive the first 30. And in that scenario, ⁓ you would be on the hook for that.
Remainder 70 times the 3340, so 210-ish thousand dollars. Okay. This is a big fine. This is a fine that we've seen put people out of business. This is a fine that, you know, is just not the surprise you want to have. ⁓ and keep in mind if you have, if you're just receiving that letter from 2022, there might be a letter from 23, 24, 25 coming as well. and what we've seen, and I can never guarantee anything, or I would never say, you know, this would happen to you is.
Miriam Allred (24:24)
Okay.
Brendan Mullins (24:30)
Usually that first fine, you know, you can work with the RS and negotiate something down or you know, maybe get it to a place where it's really minimal. However, it's not going to happen a second time. So at that point, if you were able to do that, they will you probably are now raising more flags to make sure that they're checking in every year after that. So that's that's fine one. Fine two is a much I don't want to say much better. We we call
We call part A the sledgehammer fine, right? That's very painful. part B is they will fine you five thousand and ten dollars for any employee. This is ⁓ for for sorry, they will find you five thousand ten dollars if you have not made it affordable, and that's that nine point nine six. But the way they will do it is based on any employee that goes to the healthcare exchange to get their own plan. So they will not
Look at that one employee and then go back and do all the employees, they will only charge you for that one employee that went to the exchange. So ⁓ again, I I can never give you ⁓ financial or advice or healthcare advice, but what we see with some home care agencies is they will take the risk on that second fine because the level of plan that they might need to go and provide or the dollars that they might have to subsidize for that employee.
might outweigh the fines that they think they're going to get. So it might actually be more expensive for them to go supply a plan than to just roll the dice and not be covered ⁓ for them. Does that make sense?
Miriam Allred (26:05)
Okay,
very well said. Yeah, I just wanna lay out both of those two penalties so people understand those like crystal clear. My my question is on the latter. What is your recommendation for employers to prevent employees from going to the exchange? Is that something in the handbook, something explicit in onboarding? W how do you prevent that?
Brendan Mullins (26:09)
Yeah, yeah.
Yes.
Yeah.
I don't to be real, I don't think you should, right? Because I I think that probably creates more problems for you because it's their right to go to the healthcare exchange if you're not supplying healthcare. ⁓ so I mean stopping them might actually cause more issues for you than than not. Now, ⁓ I know a lot of companies will educate people about the exchange and what they're gonna get. ⁓ but honestly the best thing to do is provide them healthcare so you don't have worry about it.
Miriam Allred (26:30)
Okay.
Brendan Mullins (26:54)
But yeah, I mean there's a lot of complexity to it for sure. So yeah.
Miriam Allred (26:56)
Okay. And that's
what I wanna kinda talk about, the complexity for home care. Like why we both know this, but I want you to kind of state like why this is more difficult for home care agencies to stay compliant with ACA than it is like any other business in edia any other industry. Like it really home care is so unique and that this is so complex for home care.
Brendan Mullins (27:01)
Mm.
Really is. It's it's really brutal. And I I empathize a lot with the home care agencies owners that we work with because it's so tough. And you know, the big reasons are ⁓ you have a I don't know, you have an accounting firm with fifty people that work there and you're an applicable large employer. Well, guess what? They all clock in the same time every day, they're all working the same hours, they all, are getting the the same kind of health care. That's pretty easy to figure out.
Problem with home cares, as everybody knows, is, you know, often you might have 100% turnover. You might have ⁓ you know, people doing a ton of overtime here, somebody calling out for shifts here. You are constantly, you know, re- ⁓ triggering schedules, you are all across the board. And then somebody comes to you and says, Hey, how many hours did all these people the part timers work last month? You're like, ⁓ I don't know. And who who qualified for healthcare? And who do you know?
Miriam Allred (28:01)
Good question. Yeah.
Brendan Mullins (28:04)
And so that's one part of it is just the turnover and the the hours make it really hard. The other part is that, like I said before, they'll they will go if you know they will go for small things, right? They will go and and shift companies or go do something else if they can get a little bit more money. ⁓ so it makes it very complicated beyond the fact that from what I've seen, home care agency owners are are taxed, right? They are usually in the the the trenches, they are trying to keep some semblance of a calendar.
They are running around trying to staff, trying to like all these different things. And then to try to go and like calculate all this stuff and do it correctly, it's it's impossible. It really is.
Miriam Allred (28:44)
And I made the comment about AI at the beginning, but I reiterate that here. I think a lot of businesses of every size are focused on kind of the flashy net new thing. When I talk about insurance and benefits and these types of topics, it's like they're unsexy and they're, you know, quote unquote boring, but like these are the essentials that can make or break your business. And I just kind of
Brendan Mullins (28:57)
⁓
Yeah.
Miriam Allred (29:10)
you know, reiterate that and put in that plug of like make sure you're focused on the most important things and not be wasting time or attention on kind of net new things that granted can help your business. Absolutely. And I talk about those things and I love those things myself, but not to lose sight of the most important things and this being one of them.
Brendan Mullins (29:28)
Absolutely. It's so funny. I was at a conference for home care agencies last year, and you know, it was a really nice one. They had like a sponsored happy hour, sponsored dinner, sponsored show, and every single one of them was an AI scheduler was sponsoring the event. And I'm like, my gosh, like how many of these are there? And it's it's great. Like you need that in home care, but don't forget, like your top two expenses are probably payroll. And then, you know, maybe it's not two, but in there is probably gonna be healthcare in the top.
You know, three to five, ⁓ if you can figure that out, you can really help the business. ⁓ and if you look at, you know, one of the things, if if people have ⁓ Medicare funding back to them, if they're dependent on that, if you look at what has happened over the last, let's say, 10 years with ⁓ reimbursement and compare it to caregiver wages, caregiver wages has you know continued to shoot up and that reimbursement has stayed completely flat.
And so it's eating up more and more and more of the margin. And if you don't address it, you know, that healthcare is is really gonna become a a massive problem for you.
Miriam Allred (30:35)
And that's that's another back to the the last question of like why is it so complicated for home care? The margins themselves. You know, there is there's not additional money just laying around these home care companies. And so they squeak by not offering health insurance as long as possible because margins are tight and there's not just cash dispendable for this.
Brendan Mullins (30:50)
Mm-hmm. Super tight. Yes. ⁓
not at all. Yes. Yes.
Miriam Allred (30:57)
Let's talk about the audit process because again, this is you know, maybe there's maybe this is a two parter, like what agencies can do to audit themselves and how they should go about that. And then I guess the formal audit process with the IRS. How how do you want to tackle this? Kind of like an internal self audit or the IRS's audit process? And is that helpful?
Brendan Mullins (31:17)
Yeah, I think I can I could talk a little bit about internally what you can do. I think on the IRS, you know, I I can't speak for them exactly like how they go through everything. but we could talk a little bit about it. I think
Usually, know, ⁓ internally, the best things that you can do, one, if you're offering health insurances, obviously to have all the documentation and do your end-of-year filings, ⁓ but also have that look back period set up so you can point at it and say, you know, we offer it in three, six, nine months, whatever it is. ⁓ but then also create an eligibility policy in the business for who's available for what business.
And that's usually triggered by ⁓ how long they've been working there and how many hours they put in. And then I would say ⁓ make sure you keep a record of everybody that declines that health insurance. Okay, because they're gonna want that when they come in. From the the look back period, I you know I I think it's really admirable if people are trying to do this on their own. It's very rare that they're gonna get it right. ⁓
And this is one of those things I really believe in outsourcing. I'm actually not a big outsourcer ⁓ person, but in this case, with everything else they have going on, like that piece at least should be outsourced, just a calculation. Because you want to make sure you get it right. And the worst thing you could do is go out and buy healthcare, offer it to people, spend all that money, and still get fined because you didn't offer it in the right way. So I'd say internally, that's that's one thing. from the IRS, you know, I
⁓ how they audit it, I don't know. You know, that's a little bit of a black box. but what I do believe is again marketplace enrollment data is gonna be the big piece and they will definitely, you know, see the one person that registered ⁓ and get you for that part B fine. And that might lead to them doing a little bit more investigation. ⁓ And I believe maybe the revenue of your business, they can understand that an average home care agency would do this amount if they had this amount of employees.
Which means they should probably be supplying health care insurance. Yeah.
Miriam Allred (33:25)
Okay. You
have interfaced with, you know, hundreds of home care companies at this point in time. I'm just so curious, I'm putting on the spot with this, if you can quantify how many people are doing it themselves, not doing it at all, or doing it with maybe a non home care specific partner, therefore probably doing it wrong. Like those are the three kind of camps that I see where if you could just kind of ballpark the industry in those three camps, where would you land?
Brendan Mullins (33:51)
Let me let me take a swing. I think I honestly think it sounds crazy, but maybe 20% of people have no idea that they are supposed to plu supply health insurance. That that's probably about right, like 20, maybe even 25%. ⁓ I think you know, there's another smaller element of people that know and they're just risking it. ⁓ and then I think you've got the large majority of people, you know, in that 65 to 75 percent.
Know they have to do it, are offering something, but maybe don't have the best like setup for their type of business. You know, like traditional group health plans, that doesn't make a lot of sense for caregivers. ⁓ they're just not gonna buy into it, it's gonna be super expensive, they're not gonna utilize it. And so I think, you know, out of that 65-75%, maybe 30 to 40 percent just don't really have something that fits a home care agency. And then out of that same group, maybe.
Ten to twenty percent are offering it but not calculating it correctly. Yeah.
Miriam Allred (34:57)
Okay. And that
that bucket, are they probably working with like a local broker that's helping them kind of configure these plans? Who are they working with to do to do this?
Brendan Mullins (35:06)
All across the board, you know, that bucket of people that are supplying healthcare but ⁓ you know might not be all like calculating correctly, I would say they're either probably doing the calculation on their own, or sometimes I I I've actually seen them go and outsource it and that's still wrong. So and you might say, Hey, how do you go and double check this? It's a great question. Because if the company that's doing it for you that you pay it isn't doing it right, that's a problem. ⁓ but yeah, I think I think
the biggest issue is they're either just doing it on their own or they're not they're not calculating it. They're just kind of randomly offering it to people.
Miriam Allred (35:44)
Okay. And when you say outsourcing, just the calculation or the calculation plus like w with the broker or the company, like they do that calculation and therefore they give you the plans. Or do they ⁓ I don't know, I'm just wondering, are they doing the calculation? Because it seems like there's so much room for error in the calculation itself that even people that claim they're experts in this are likely doing the calculation wrong.
Brendan Mullins (36:06)
Could be, yeah. The the broker is typically not going to do the calculation. They're going to set you up the plans. your payroll company, like you said before, might do it for you, but you might have to tell them to do it. ⁓ or you know, buy like another module. so you know, most of the time it's it's on you. And that's that's the unfortunate part about a lot of this. Most of this is on the owner. ⁓ you know, there's things like issuing benefit notifications. There's things like, you know, ⁓
Like well, I mean like filing the taxes, like all of these different things that you're expected to know and you might just not, right? So so it is it's on the owner. and they yeah, they could just outsource that one part. They could just go and do the hours calculation, but if they're not doing it, nobody else is doing it for them, unfortunately.
Miriam Allred (36:57)
Yeah, and that's that again is just a good reminder to everyone listening to this of like likely no one's doing this for you and so you need to do it yourself or engage with someone that's gonna do it for you and do it right.
Brendan Mullins (37:08)
Yeah. And I've I've heard, you know, actually was on the phone with somebody yesterday, I think, where they said it, well, hey, you know, ⁓ is it okay if I just offer it to, you know, their employ one employee because I know she works really hard? And it's like, that's great, but that's not the way it gets separated out, right? Or, you know, or I don't want to offer it to this person because they're out sick a lot, so they probably don't qualify. It's like, well, that's great, but like you probably should do the math and make sure that's right because
If not, the IRS isn't gonna come and say, they were sick a lot, okay, no problem. You know, they're gonna come and be like, You didn't do this right.
Miriam Allred (37:44)
And these are the misconceptions. I actually wrote down a few. Let me share the ones that I came up with, but I want to hear what other misconceptions that you have because there's just so many misconceptions. And I not to knock on anyone, but it's like these are easy things that leaders could think. And so we want to just kind of like vocalize these. The ones that I came up with. ⁓ we don't have many 40-hour employees. That's what people are gonna think. Full-time equivalent. We don't have, we don't have many four 40 FTEs.
Brendan Mullins (37:48)
Yeah, yeah, yeah.
Yeah.
Yeah, yeah.
Yeah.
Yeah.
Miriam Allred (38:09)
The
threshold is 30 hours. So let me just set the record straight. And then we already walked through the calculation. And so the calculation is way more complex. But on the surface, people may think, we don't have many forty 40 hour employees. ⁓ second one, part-time employees don't count. Again, misconception, a misinterpretation of kind of like the jargon here. Part employees don't count. ⁓ another misconception, we offered coverage once.
Brendan Mullins (38:23)
Correct. Yep. Yep. Yes.
Miriam Allred (38:36)
And so we're compliant, you know, therefore we put something in place and just continuously we're compliant. They're not like revisiting it. ⁓ and then the last yeah.
Brendan Mullins (38:42)
And the second part of that I was gonna say that
one usually comes with and nobody wanted it or nobody took it, so we stopped it is what we hear a lot.
Miriam Allred (38:51)
Exactly. I hear that all of the time. We offered it. Nobody took us up on it. Therefore, we just opted out. It's like, no. And then I guess just the last one I have is we're too small. You know, agencies think, we only have forty employees. we only have sixty employee you know, like they don't understand the fifty and what that actually means, but like, we're too small, we're only a three million dollar company, like we're not over that threshold.
Brendan Mullins (38:56)
We're good. Yeah, no. Not good.
For sure. That last one, it's interesting. We see kind of like I would say like a difference depending on employee size. And honestly, when they're like zero to maybe ten, fifteen employees, they're often looking for something because they need to be competitive in the market to, you know, get people on board. And so they might come in, even though they don't have to supply it, ⁓ to get healthcare because they they just need to go hire caregivers and they're very small and so they need something to attract them.
⁓ and then we see a kind of tail off from like that fifteen up to maybe thirty employees, and then it jumps back up again when they start getting more towards that compliance frame. So it's yeah, it's interesting. It really is.
Miriam Allred (39:55)
Yeah, we haven't even talked about that. That's a that's a different angle of like the workforce and the labor shortage and how competitive it is out there and offering this not just to check the compliance box box, but to offer this as an incentive and a benefit to your employees. And and you yes, maybe speak to that of seeing this as something that, you know, you have to check the box, but also as an opportunity to attract people.
Brendan Mullins (39:58)
Yeah. Yep.
Yeah.
Yeah, for sure. I mean, again, with turnover what it is, it's like it's so competitive and you know, the the caregiver market is very difficult. And finding people that you, you know, like and want to hold on to is tough. And they will. They'll go somewhere for quarter extra an hour or something along those lines. And so we do see a lot of agencies, especially when they're new.
They come in and they are just trying to figure out how to get clients and how to get carriers on board. And that's one of the things that they realize, okay, I need to do something to be competitive in the market. And so there's different variations of what that could be. You might not go out and supply them with a full boat healthcare plan, but you know, there's other options that you can offer to them ⁓ that are are minimal. Don't doesn't cost the company a lot, but still gives them something that they can actually use. So it's yeah, I mean, it's it's a recruiting strategy for sure.
Miriam Allred (41:12)
Yeah. Just a quick kind of recap of the conversation, Brendan. You're talking to all these leaders. They've just listened to everything that we just shared. What are like the I don't know, three to five things that they should go out and do after hearing this conversation? We just kind of jogged through it all. What if you heard this and you weren't compliant, like what are the first three things that you would do?
Brendan Mullins (41:25)
Yeah.
So the so one, I you need to get a really good understanding on your employee count if you haven't already. And you need to make sure you work through that calculation ⁓ to understand because Miriam, your first line was we hear it all the time, we're just like, you know, no, I'm I'm fine. I only have 10 full-time employees. It's like, okay. ⁓ so I'd say that. I would say ⁓ second, if you're already offering something, ⁓ I would just double check that it is compliant. And I would also double check that it's something that
people actually want to use or can use that fits home care agencies. And again, one of the big problems is, you know, if you got that that same accounting firm I was referencing, right? They they want really high level benefits probably. And that's expensive and often caregivers wouldn't be able to afford that level of benefit. So you want to make sure that what you're offering is something that they can actually use.
and then you challenge me. A third one I would say I would say it probably goes back to ⁓ you know that affordability. So if you are if you are trying to be part B compliant and you know you have all your healthcare is purchased and you're offering it everybody, are you doing it the right way? You know, are you subsidizing ⁓ their health care if it's too expensive for
Miriam Allred (42:56)
And I'll add the fourth, look into Vitable. Let's, let's, everyone's listening to this. And granted, I came to you all like I think this is so important and just nobody should have to go through this. And and you can all kind of like tease this, but you can share a little bit more. Joe, the founder of Vitable, his parents run a home care company and they were up against this exact issue.
And that's where Vitable was born was okay, we we just went through this ourselves. Let's go out and help a bunch of other home care companies avoid this, learn about it, and then offer actual like programs that help with this. So that's kind of my pitch. But talk a little bit more about Vitable and what you all offer and why you've built things the way that you have for home care specifically.
Brendan Mullins (43:36)
Yeah, sure, a thousand percent. You know, it's funny, Joe's family still does own that home care agency. And so anytime we think we have a great idea, that's like the testing ground for all of our great ideas. So we'll we'll try it out there. And if it doesn't work, we'll we'll hear it pretty quick. and so you know, ⁓ Joe did have that vision. He saw that there were a lot of, you know, these these caregivers that are taking care of our loved ones weren't being taken care of on their own. And, you know, what that meant was they would go out without health insurance, they would ⁓
you know, go to the emergency room for small things that end up costing them a fortune, they would, you know, not have the same life expectancy as, people that were having health care, obviously. It's not a great situation. And so he started the company building direct primary care, ⁓ which was employer paid. They pay a small subscription price, and that employee gets all of their, you know, preventative doctor's visits, medication, lab work, mental health therapy and coaching, ⁓ all of that taken care of, no deductible, no co-pays.
They can just have the peace of mind of going and getting that preventative care, which ideally helps in the long run. And for the employer, also helps on sick time because they're not calling out as much. and so you know, built the company on that and then really started branching out into ⁓ a bunch of other ACA compliance solutions that fit home care agencies. You know, traditional benefits, like said, often don't fit there. ⁓ and along with this, we manage that compliance. So
You get a really simple path to that. All of the stuff that Miriam and I were just talking about, obviously it's it's really a lot. It really is. And so we are, you know, ⁓ built to, you know, make sure we're doing that correctly. ⁓ and utilization. When people have Vitable, they actually use it as compared to a lot of these other healthcare plans that just don't get much utilization. So our our goal is really to take those help home care agencies and allow those people that are taking care of others to go and
actually be helped themselves. So hopefully that gives you a little bit.
Miriam Allred (45:34)
Yeah. And that's actually something I've heard firsthand is utilization with Vitable. And I I think I draw attention to that because again, there's employers out there offering something and it may be pretty good, but like tracking utilization of benefits is really important to see if people are actually taking advantage of it. And vitable is simple and understandable and applicable. Therefore, people are utilizing it. Therefore, as an employer, you feel like this is worth it, you know, when you're just paying for something that's not being utilized.
You shouldn't be doing that essentially or it hurts, you know, a lot more. But this is like if they're actually using it and healthier and happier and their families are safer, like you almost can't put a price tag on that.
Brendan Mullins (46:12)
Right. Yeah. Yeah. No, you're dead on and it it really is. There's there's you can imagine the thing we actually didn't talk about is that when the ACA was created, you can imagine that what immediately followed it was what is the cheapest plan and the worst plan that will get me qualification for this, right? So all of these plans were created that were just built to fit compliance. And unfortunately that's what a lot of people sign up with, and the plans are really unusable.
And so because of that, you might be compliant, but your people are just sitting there going, like, what is this thing? Like you know, so ⁓ with Vitable, you know, we can we can get you very compliant plans, but we also layer in that primary care that makes sure that people are taken care of.
Miriam Allred (46:56)
And so to make sure people understand, you all like check the compliance box, but then you have all of these plans. So you all have gone out and built the relationships with these insurance companies and healthcare companies and like you've built all of this out. And then you also have, if I understand, like the technology piece, like the software, like essentially you have the full package so people can come to you, check the compliance box, but build and choose the plans that they want. And then you see through all of the like implementation and execution on all the way down to the caregiver level, correct?
Brendan Mullins (47:25)
Absolutely. So for our for our primary care, we actually own the whole network. So those are all our providers. ⁓ so that's all controlled by Vitable and we have very high standards on who you know is servicing our clients. we work with partners for some of our other plans, but then also we are and I don't again
all the different layers. We're an ICRA administrator, which is something we all do all in-house, which is individual choice plans where your employee can go out and shop many, many different plans across a marketplace. You give them an allowance and then they use that to go and purchase whatever plan makes sense for them. So geographically or if they've got certain doctors they want to see or certain things covered, they can buy the plan that's right for them. And then on a separate note, we do all the compliance that's our own tools that we've built.
Miriam Allred (48:11)
And you say some of it you all kind of like own and run in house. I guess that just kind of begs the question of like, are you nationwide? Are you only in certain states? Or does that ICRA kind of program help with being nationwide and that people can kinda pick and choose and it's more allowance based?
Brendan Mullins (48:26)
Everything is nationwide. Our primary care that network is nationwide. ⁓ we can administer ICRA and all of our other plans in any state, so yeah.
Miriam Allred (48:33)
Okay.
And just cost, can you throw out not specific numbers, but what people are paying paying elsewhere and then how you all kind of structure your pricing for this? Is it per head? Is it c more of a lump sum? I think people just want to know like even how you compare to what they might already be doing.
Brendan Mullins (48:49)
For sure. Yeah, it's it's tiered based on ⁓ the size of your business. And there's always two sides of the cost. There's actually like our fees, the administration fees, but then there's also the cost of what your employees are gonna pay in premiums or you know, their own costs that you would bill them back through payroll, just like whenever you've had a health insurance. So when you get charged by Vitable, you'll have those two costs. Our administration usually runs
You know, to to give you like an average, we we again we charge a based on tier, but like an average employee per head cost is probably about thirty dollars per employee per month. with you know, but when they sign up for a plan, they might go and pay that premium, which the employee would be going and paying for. And if it's not affordable, you might be subsidizing that. So it's not vital costs, it's what you'd have to pay with anybody else. Yeah.
Miriam Allred (49:38)
Got it. And
that's useful for people to kind of like cross compare what they're currently doing. I guess I'm a little bit naive. Is that similar to what they might be paying? Is that a lot more or a lot less to what they might be paying? Okay.
Brendan Mullins (49:49)
Wildly across the board. You know, it
really depends on what they're doing today. And there's the tough thing about this industry is there's so many different options on what they could do. And if they have group health plans, that's probably very expensive. If they ⁓ you know, working through a broker, sometimes that can be really good. Sometimes it can be really inflated. So the best thing to do is always just get a a second look at it.
Miriam Allred (50:12)
Yeah, I couldn't agree more. Brendan, you've been awesome. This has been fantastic. I think you've represented Vitable well. I just want to put the plug-in for you all are a wealth of knowledge. And I hope this conversation has demonstrated that. And so if you all of you listening to this are thinking, like, wow, I I really should get someone to kind of like double check my work here, Vitable's a great option to just go and have a conversation with, to kind of look at your numbers, do a kind of a mini version of that audit, and then decide for yourself what what next steps to take. But it's so nice to just have an expert.
Like in your back pocket to go and bounce these things off of because again, this is complex, but it's extremely important. And I and we wanna help leaders avoid these very common pitfalls. And so we hope that that's this conversation has been kind of a step in the right direction.
Brendan Mullins (50:46)
Very
This is awesome. Thank you, Miriam. I really appreciate the time.
Miriam Allred (50:59)
Awesome. Just last thing I'll say, vitablehealth.com. For anyone listening to this, it'll be down in the show notes. But connect with Brendan and the team there and then also go to vitablehealth.com to learn more. And ⁓ you know, don't be a stranger. These guys know what they're doing and reach out to them. So Brendan, we'll wrap here. Thank you so much.
Brendan Mullins (51:15)
Thank you. Great talking.