Employer-based educational programs still can be used to help pay off worker students’ loans through the end of next year, potentially enabling long-term care employers to provide relief to their workers who are struggling to pay off such debt.
The IRS issued a reminder last week that employers who offer educational assistance programs also can use them to help pay for their employees’ student loan obligations through Dec. 31, 2025.
Although educational assistance programs have been available to employees for many years to help them pay for tuition, books, supplies and other educational expenses, the option to use them to help workers pay off student loans has only been available for payments made after March 27, 2000, according to the IRS. The student loan provision will expire at the end of 2025.
The student loan payment initiative may be one way for senior living, nursing home, home care and hospice employers to attract and retain employees, many of whom may be trying to pay off student loans.
More than 22% of nursing home workers and almost 20% of home care workers carry educational debt, potentially threatening their careers, according to research published in July in JAMA Health Forum. Nursing home workers’ mean educational debt amounted to $6,375, and home care workers’ mean educational debt was $5,154.
That same study found that 20% of nursing home workers and almost 22% of home care workers carry medical debt. Nursing home workers’ mean medical debt amounted to $2,639, and home care workers’ mean medical debt was $1,808.
“US health care workers are more likely than other workers to carry medical and educational debt, collectively owing more than $150 billion,” the study’s authors wrote. “We found that medical debt was more prevalent among women, home health and nursing home personnel, uninsured individuals, and those with recent hospitalization.”
The authors also found that educational and medical debts were associated with adverse outcomes that may limit worker mobility, reduce workforce mobility and discourage potential employees from entering low-paying fields, such as long-term care.
In its reminder notice, the IRS noted that employers that don’t have educational assistance programs may want to consider setting one up, because fringe benefits such as educational assistance programs can help them attract and retain quality employees. The agency further noted that in most cases, educational benefits are excluded from federal income tax withholding, as well as Social Security, Medicare and federal employment taxes.
