Insurance Risks for At-Home Care Agencies and How to Address Them

As health care costs rise unsustainably and the aging population booms like never before, the need for affordable at-home care continues to grow. But from an insurance standpoint, providing that care could soon come with more risk and a higher price tag.

“There’s no specific data that is publicly available that speaks to [at-home care companies], but in general, the whole health care sector is experiencing an increase in the severity of claims and the frequency of claims,” John Atkinson, managing director at insurance broker Willis Towers Watson, told Home Health Care News. “Home health care would be included in that.”

From an insurance purchasing perspective, that could mean at-home care companies will be subject to increased requests for information when purchasing insurance.

Additionally, it could impact the structure of insurance programs and, in some areas, increase premiums, Kirsten Beasley, head of health care broking at Willis Towers Watson, told HHCN.

In many ways, home health and home care insurance claim trends are comparable to those in senior living, a segment for which more insurance data exists, Atkinson said. In both settings, as clients age in place, they are living longer and becoming frailer.

As such, liability insurance rates for the senior living industry could increase by as much as 30% in 2019, according to Willis Towers Watson. But for at-home care companies, liability is only one part of the puzzle.

Auto

Home health and home care companies can expect to see the most premium increases and policy tightening within the automobile insurance realm, Beasley said.

Unlike in senior living, where professional drivers use company vehicles, at-home care companies employ hundreds to thousands of caregivers who more often than not drive their own cars to and from clients while on the clock.

“There are cases where the caregiver or the aide may run errands for [a client], and over the course of her driving to and from one home health care visit to another home health care visit, she’s actually working on behalf of the agency driving her vehicle,” Atkinson said. “If there’s an accident that occurs, there could be liability that inures to the home health company as well as to the driver.”

As such, driver safety programs and driving background checks will become increasingly important when screening caregivers in the years to come, Beasley said.

“I absolutely think that is a key feature of having a robust fleet safety,” Beasley said. “I also think you’re going to see an increase in use of other technologies, like Uber and Lyft, to defray that exposure.”

To Beasley’s point, many home care agencies have already started teaming up with ride-hailing companies. The list includes El Segundo, California-based 24Hr HomeCare, which coordinates hundreds of rides for its employees on a yearly basis, though not necessarily for insurance liability purposes.

Workman’s comp

Workman’s compensation, which protects employers and benefits employees for claims arising out of the work environment, is also different for at-home care companies compared to senior living providers.

“[For caregivers], there’s really no oversight or ability to control the environment,” Atkinson said. “So from a workman’s compensation standpoint, you’re taking these work environments as you get them.”

In some cases, that puts caregivers at a greater risk, for example, presenting trip hazards or leaving them without devices to properly lift and move residents. Additionally, lack of supervision makes it difficult to ensure safe practices or discern whether injuries occurred at work.

However, providers can manage risk by developing quality care programs akin to those used in in-patient health care organizations.

“It’s not rocket science,” Atkinson said. “It’s really attention to detail and blocking and tackling on a day-to-day basis to make sure that as an operator, you’re attracting and retaining as qualified talent as you can and trying to train and educate people the best you can to minimize risk.”

General liability

The same principles apply in minimizing general liability claims, which can arise when clients are injured while under a caregiver’s watch.

“We instruct our clients to help patients assess the hazards within their own environment and make sure they’re aware of them,” Atkinson said. By optimizing homes for aging in place, providers can then minimize incidents such as falls, which are projected to kill thousands of older adults and cost nearly $60 billion by the year 2020.

Launched in 2015, the Louisville, Colorado-based Living in Place Institute works with the Universal Design Living Laboratory to help home health providers identify and address potential obstacles in their clients’ homes. Kendal at Home is among several providers that have turned to the living lab for home-safety expertise.

In the senior living industry, liability claims and settlements are on the rise, with the of bulk claims coming from facilities dealing with higher acuity levels of care such as assisted living and memory care. Often times, senior in these facilities enter at an older age and are less healthy.

As such, general liability premiums are on the rise in senior living, but that’s not necessarily the case in home health care.

For one, at-home caregivers aren’t responsible for clients 24 hours per day. Additionally, clients are often more autonomous and have higher levels of functional ability. For these reasons and others, the rise in general liability claims is less pronounced for at-home care companies.

“I would say that overall, if the home health organization has not seen a whole bunch of losses in claims, they should not expect to get premium increases [in this area] just because of [the market’s] transitional state,” Beasley said.