10 Tips on the Financial Matters of Caregiving - TIP #5: How to Hire Paid Caregivers

[agoyer]

When I was caring for my parents, I provided around 60 to 80 hrs of unpaid care per week. I did evenings and weekends but had paid caregivers while I worked (and when I traveled out of town for work). Eventually, as Dad's Alzheimer's progressed, he needed two people to help when he was up and moving, so even when my sister or I were there, we needed another set of hands at times. The necessary cost of hiring paid caregivers was high, but it helped me keep Dad at home through the end of his life.

There are pros and cons to each of the various ways to hire paid caregivers (also known as home health aides or personal care aides). Here are some things to keep in mind:

• The cost will vary from state to state and even within a state, so do some research about the going rate in your loved ones' area. 
• If you hire through an agency, the agency takes a substantial portion of the hourly rate you pay. The caregiver isn't getting paid the entire amount. The pros of this approach include the fact that you don't have to do the search and background check, etc., and if your caregiver can't come they may have someone else to send. The cons include paying more and not necessarily having a guarantee that they will send the same person consistently. The workers may or may not get adequate training. You can find agencies using the Community Resource Finder. Be sure to check with the Better Business Bureau for complaints, and ask family and friends for referrals to agencies they have been pleased with. If the agency is Medicare-certified, you can also check the Medicare Care Compare website to see their quality and patient survey ratings.
• If you hire directly, without going through an agency, you can generally pay less than if you paid an agency. The pros of this approach include the fact that you'll generally pay much less since there is no agency involved. You'll want to look for someone who has a good background of training and experience, but you'll be able to train and manage them around your loved one's specific needs - you will be their supervisor. You may need to hire two or three people if you want 24-hour coverage, but if you hire them full-time they are probably more likely to show up for work consistently. I tried to have another caregiver whom I had trained and was ready to step in if our full-time caregiver was sick. You'll also have the ability to fire them and find someone else who fits your needs. The cons to this approach include the search to find someone (ask friends and family for personal referrals, check with your faith community, area agency on aging, and senior center; you can also try the online registry sites like Care.com, Carelinx.com, and enannysource.com). You'll also need to do a background check (the registry sites often provide a way for you to do this) and check their references. 
• To pay caregivers, you'll need to use private funds (yours or your loved ones' own budget), or in some cases long-term care insurance will cover the costs (and may dictate how you hire), or if your loved one is a veteran, you may be able to get assistance from Veterans Affairs). If your loved ones are enrolled in Medicaid, they may pay for in-home care so be sure to ask the caseworker. Be aware that Medicare does not pay for ongoing in-home care. 
• Be sure to stay compliant with taxes - if you use an agency they will take care of that. If you hire directly, that will be your responsibility to take care of both employer taxes and ensure the employee taxes are handled. I used a payroll service (such as HomePay, Gusto, ADP, Paychex etc.) which made it all easy and worth the fee so I didn't have to worry about doing it correctly. You can also have your accountant handle it or calculate and pay the taxes yourself. 

I hired caregivers both ways - through an agency and directly. I had both good and bad experiences with both approaches. In end, for me, it came down to the budget. I had to train and supervise caregivers either way to ensure they provided the care I wanted for my parents. Even with the cost of using a payroll service, it still saved me money to hire directly. My parents' long-term care insurance helped cover some of the cost, and later Dad had veterans benefits that helped pay for part of the cost. 

Everyone's situation, and the cost of care, is unique, so look at all the options and make the best decision for yourself. 

Learn more about how to hire paid caregivers in the AARP article "How to Hire a Caregiver". 

Tell us about how you found and paid caregivers! 

Take care,

Amy Goyer, AARP Family & Caregiving Expert

Author, Juggling Life, Work and Caregiving

[GailL1]

Just to add another couple of things -

If hired through an [licensed] agency, the agency takes care of some of the other cost like

• taking out, paying/matching and reporting all the applicable taxes - State, Federal, FICA, unemployment
• covering the worker under Workmans Comp insurance
• the agency should do the background checks, E-verify if the state requires it
• any health reviews or checks necessary for a caregiving job 

When going thru an agency they take on a lot of the actual risk.

If a self-hire, make sure that the homeowners insurance coverage has a rider for caregivers - 

If they are going to be driving your car or transporting the patient - don't forget to check driving record and adjust car insurance according to what they will be doing.

If a self-hire, depending upon the structure they are hired under, taxes will have to be taken out, matched, reported and paid as well as reported to the employee(s) at the end of the year.  

IRS.gov - Hiring Household Employees

IRS.gov - Topic No. 756 Employment Taxes for Household Employees

IRS.gov - Family Caregivers and Self-Employment Tax

The tax reporting sounds complicated - but once it is set up, it isn't bad.  Just get it set up right in the beginning - see an accountant.

Remember, this is a job, and these folks need a fair rate of pay.  How much would you want if doing such a job.  Then reward work well done.   The other thing that needs to be clarified is what is a full shift?  8 hours / 10 hours / 12 hours?  What will be paid if it goes over this allotment.

[agoyer]

Thank you @GailL1! I can't believe I forgot to mention the taxes! I'll edit my post to include that. And you make good points about transportation and insurance!