Recruitment & Retention:
IRS Hikes Mileage Rate 20% In Face Of Gas Prices
Published on Thu Aug 18, 2005
Providers struggle with whether to increase mileage reimbursement. Welcome news about travel reimbursement for frontline home care workers might be a budgetary night-mare for management.
The Internal Revenue Service announced Sept. 9 that it is increasing its mileage rates a whopping 8 cents to 48.5 cents per mile. That's a 20 percent increase over the old 40.5 cent rate.
The increase is retroactive to Sept. 1 and applies until Dec. 31. "In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2005," the agency says in a release. "The IRS normally updates the mileage rates once a year in the fall for the next calendar year."
The IRS is waiting a bit longer than usual to unveil its 2006 rates because gas prices are projected to drop. The new rate will come "closer to January," IRS Commissioner Mark W. Everson says. Between a Rock and a Hard Place The IRS increase will be good for home health agencies and hospices that are able to afford to increase their mileage rates, notes consultant Judy Adams with the Charlotte, NC-based LarsonAllen Health Care Group. It will allow employees to receive for travel 8 cents more per mile that isn't subject to compensation taxes and withholdings.
Home Care Association of New York State members have been fielding complaints from their workers about travel reimbursement not meeting actual expenses, says the association's Andrew Koski.
"Caregivers and clinicians have been feeling the pinch of the gas increases more than before," adds Joie Glenn of the New Mexico Association for Home and Hospice Care.
But a number of factors will make implementing travel reimbursement rate increases very difficult for many home care providers. While the IRS has raised its rate, Medicare and other payors haven't provided any more funding for HHAs to pay that rate, Koski notes.
And the increase comes at a bad time for rural agencies who pay out the most for travel, Glenn points out. They already have lost the extra 5 percent of reimbursement they used to receive through the rural add-on under the prospective payment system.
A lot of providers still can't afford even to pay the old 40.5 cent per mile rate, Adams notes. Many providers have only recently increased their rates to approach that old rate, relates consultant Pam Warmack with Clinic Connections in Ruston, LA.
Example: Alacare Home Health and Hospice based in Birmingham, AL has adjusted its travel rate six times in the last year. "We had two increases equaling $0.03 per mile in just the last month," Alacare president John Beard tells Eli. Alacare's rate is now up to 39 cents per mile. Average Employee Pays $45 per Week for Gas The gas prices are racking up [...]
