The one idea: A home-care agency with hundreds of caregivers might not owe ACA coverage at all, if the client or family receiving care (not the agency) is the common-law employer.
When the ACA passed, low-margin industries with lots of workers worried about the employer mandate. The law created no industry carve-outs, but regulators flagged one sector where it works differently: home care.
The common-law employer test
The IRS asks who the real employer is using the “common law” test, and the key question is: who has the right to control how the work gets done? If the agency directs the caregiver’s hours, duties, and performance, the agency is the employer and is subject to the mandate. But if the individual receiving care (or their family) controls the details of the work, the IRS may treat that individual, not the agency, as the employer.
Why it matters
For an agency with hundreds of low-paid workers, this distinction is everything. If many caregivers are technically employed by the clients they serve, the agency’s exposure under the employer mandate shrinks dramatically. And the families usually don’t have 50 or more full-time employees, so the mandate doesn’t apply to them either. The flip side: caregivers may end up with fewer chances at employer-sponsored coverage, a real tension between the ACA’s goals and the economics of the industry.
Why it matters to you
If you work with home-care agencies (or any staffing-style business that places workers in clients’ homes), don’t assume headcount alone equals mandate exposure. The common-law employer analysis can change the whole picture, and it’s a sophisticated point that sets you apart when advising those clients.
Key takeaways
- The ACA has no industry carve-outs, but the common-law employer test can shift who “the employer” is.
- Control over how the work is done decides it: agency-controlled means the agency is the employer; client-controlled means the family is.
- That can shrink a home-care agency’s mandate exposure significantly.
Check yourself
A home-care agency places 200 caregivers, but each client’s family sets the schedule and directs the work. Who may the IRS treat as the employer, and what’s the effect?
The families may be the common-law employers, not the agency. Since families rarely have 50+ full-time employees, the mandate may not apply, shrinking the agency’s exposure.