The home health care industry is one of the fastest growing business types in the U.S. As the American population grows and the life expectancy becomes longer the population needing health care type services at their home continues to increase. In my experience home health companies are servicing the elderly, the mental or physically disabled and people with permanent disabilities that require constant care.
There are three types of home health agencies that can have a drastically different impact on the business insurance coverages.
- Business that employs all as W-2 employees
- Business that chooses to employ all as 1099 independent contractors
- Placement agency that places their employees with a third party employer
The first type is the easiest model to insure for professional liability, third party crime coverage and workers compensation coverage. Being employed on a W-2 status, these are direct employees and the ownership of the business has the right to direct, control and fire. Insurance companies prefer this set-up. Business owners MUST make sure their third party crime bond extends coverage to the client’s home.
The second type is the most difficult to insure. For the third party crime coverage, business owners must confirm that coverage is specifically for “independent contractors”. For the workers compensation coverage there is a specific question on the application asking about “sub-contractors” and whether they are insured or uninsured. You must answer the question “Yes, the business is using sub-contractors”. If you are covering the 1099’s under your policy the business owner must also answer “Yes, the sub-contractors are uninsured”.
The third type is different from the two above because the business owner is not purchasing a policy to cover their tax id number. For a placement agency, the business owner is “leasing” their employees to a “Leasing Company” aka “Professional Employer Organization” aka “Staffing Agency”. The staffing agency is insuring under their tax id number specifically for workers compensation. If the staffing agency requires the business owner to purchase their own professional liability and third party crime coverage, the business owner must inform their insurance company and make sure coverage is acceptable.