Federal policy changes converge on the direct care workforce

KFF published an analysis on July 9 concluding that a cluster of federal policy changes could deepen shortages in the direct care workforce that provides long-term care across the United States. The reconciliation law's $911 billion in federal spending reductions and its new Medicaid work requirements sit at the center, given Medicaid's role as the primary payer for long-term care. Layered on top are two Department of Labor proposed rules: one would roll back minimum wage and overtime protections for home care workers, and the other would make it easier for employers to classify direct care workers as independent contractors. CMS has also delayed enforcement of a Medicaid Access Final Rule provision that would have required states to convene an advisory group on direct care worker pay rates.

The wage rollback would undo a 2013 Obama-era decision that extended Fair Labor Standards Act coverage to home care workers, guaranteeing at least the federal minimum wage of $7.25 an hour. The Trump administration's Labor Department has proposed rescinding it, a move that could affect wage protections for over 3 million home care workers, and it has already suspended enforcement of the 2013 rule against agencies through Field Assistance Bulletin 2025-4. The sector already loses workers fast: annual turnover runs about 80%. PHI's Kezia Scales reads the rollback as a signal that home care workers are not seen as deserving of basic employment protections.

Immigration policy compounds the strain. Three in ten direct care workers are immigrants, and a late-June Supreme Court decision cleared the Trump administration to strip temporary protected status from Haitian and Syrian workers. Immigrants make up about 30% of the caregiving workforce in long-term care settings, with Haitians alone accounting for 7%, according to LeadingAge. The House passed legislation in April to extend Haitian TPS, but the Senate has not acted, leaving agencies and the families that depend on them waiting to see how many caregivers will be forced to stop working.