Market Leaders Podcast: Navigating health benefits and ACA compliance for home care agencies

Vitable’s Founder and CEO, Joseph Kitonga, joined McKnight’s Market Leaders Podcast to talk about how his parents’ experience running a home care agency led him to create Vitable, why home health care businesses are among the most likely to be audited by the IRS for non-compliance with the Affordable Care Act, and how agencies can think about health benefits as part of their overall growth strategy.

This interview has been edited for length. To listen to the full interview, please visit McKnight’s Home Care.

Adam Healy:

Let's start by talking about you. Can you tell me about your background and how that led you to start Vitable Health?

Joseph Kitonga:

First, thank you for having me. When my parents and I immigrated to Philadelphia, I had the privilege of a lifetime watching my parents chase the American Dream and start a small business, a senior care agency. They were caregivers themselves and eventually hired caregivers to take care of seniors in their homes. 

Over the last 15 years, they grew it into a meaningful small business with 200 caregivers. Most of those caregivers made too much money to qualify for Medicaid yet too little to afford a “Cadillac” health insurance plan. It was important to my parents to offer a plan. They wanted to take care of their employees and be a competitive employer—but they found that less than 10% of employees opted into the plan.

The majority remained uninsured, which resulted in heavy reliance on emergency room services. I’m sure you have heard a version of this story before, but upwards of 70% of ER visits are unnecessary, costing $1,300 on average, which is a lot of money for anyone, but it's especially taxing for the everyday hourly worker. 

These costs make upward mobility more difficult and, more importantly, generally lead to worse health outcomes. 

I came across a statistic that blew my mind and turned this issue from an interesting problem to one I was excited to dedicate the rest of my career to solving: In Philadelphia, in two zip codes just five miles apart, the average life expectancy difference is about 20 years. 

Sadly, this is true in most major US cities, and it's not rocket science to figure out why. There are a few variables that contribute to the disparity, but the one that we're most focused on at Vitable is the lack of access to high-quality preventative care. 

Vitable was created to solve the question of how we can make affordable, delightful healthcare accessible to this population that's been so underserved, primarily by helping employers take care of their employees. 

Because my background before Vitable was computer engineering, the core of what we've been building at Vitable is this: how can we use technology to make healthcare more affordable and accessible to caregivers and their employers?

Adam Healy:

It sounds like it's been quite a journey, and I want to stick to that theme of growth. So, as Vitable has grown, how has it evolved to continue helping home care agencies?

Joseph Kitonga:

My mom was our first client, and over the four years since we launched Vitable, we have added hundreds of home healthcare agencies, helping over 50,000 members get access to really high-quality healthcare through their employer. 

We started off with this core thesis: Employers and home care agencies, like my mom, needed to offer an ACA-compliant plan to avoid the IRS penalties brought about by the Affordable Care Act. However, although they wanted to offer amazing benefits to help attract and retain employees, the cost was often prohibitive. Everyone who works with home care agencies understands how significant margin constraints are. 

To solve this problem, we designed this delightful primary care-driven health plan to satisfy parts of the ACA rules and avoid penalties. This approach has supercharged our growth because employers can now offer essential health benefits while keeping the business ACA compliant. This is a win-win for everyone: a win for the employees, who get awesome benefits, and a win for the employer, who is able to become ACA compliant, which before Vitable wasn't possible. 

Our primary care membership, which is the core of all the health plans that we sell, has a $0 copay and $0 deductibles, and dependents are included at no cost. It's really tailored for caregivers.

Adam Healy:

Well, I'm so glad you brought up the ACA. As you know, home care agencies are among the most likely to be audited by the IRS for ACA non-compliance. I'm just wondering, in your opinion, why is that?

Joseph Kitonga:

I always think back to my mom. She was so busy every day, handling everything that could go wrong or would come up. The most important thing was how she could focus on spending time with the caregivers and patients. Part of it is that homecare owners and operators are incredibly busy, and there's a lot of confusion around the ACA guidelines. One major piece is tracking full-time employees, which involves complex data collection and often results in incorrect FTE calculations. I'm just imagining my mom, and it's quite overwhelming.

Adam Healy:

You're right; there's so much complexity. So, let's break it down for our listeners. Could you walk us through a typical scenario where a home care agency might face an IRS investigation or penalty for ACA non-compliance, and how might Vitable help mitigate that risk?