Why
use a home care agency instead of hiring a caregiver privately?
For
many years, home care services for the elderly have been
provided by caregivers who are privately hired directly
by consumers. Unfortunately, most consumers who use the
services offered by these independent caregivers
never realize that there are potential liabilities and tax
consequences of such an arrangement. These liabilities can
be substantial and could have a serious impact on the consumer.
This article outlines the challenges associated with using
‘private hires’ for home care. It also provides
important reasons and recommendations as to why it may be
in the client's best interest to use a full service home
care agency.
1)
The Risks Associated with Hiring a Private Caregiver
Many
families pay for home care services privately out of their
own pockets. This being the case many consumers are lured
to the cheapest price for care, without understanding
the implications of selecting a provider based on price
alone as the deciding factor.
There
are a host of issues that consumers and private caregivers
face when establishing a private home care relationship
versus using a worker from a full service agency. One very
important issue is that there is an ‘employer-employee
relationship’ created in most private hire situations.
The consumer becomes an employer and the caregiver becomes
an employee of the consumer. Most consumers are not aware
of their employer obligations as set forth by the New
York State Department of Labor. Both consumer and worker
could suffer substantial financial liabilities.
2)
Payroll Taxes, Employee Withholdings and New Hire Reporting
As
an employer, the consumer is responsible for ALL employee
taxes and withholdings. This includes state and federal
payroll taxes, social security, Medicare, federal and state
unemployment. A breakdown of employer tax obligations as
well as the worker's tax obligations is below:
Taxes
paid by Employer
When
the consumer is the employer and these taxes are not being
withheld/paid, the consumer runs the risk of being sued
by the government for back taxes. A consumer's estate can
also be liened for back taxes, interest and penalties. If
many days/hours of care have been delivered over time, this
tax responsibility can be substantial. Authorities may also
levy civil fines and pursue criminal charges for non-payment
of taxes.
There
are also potential issues for workers, such as minimum wage
and overtime protection. Additionally, the non-payment of
social security leaves workers no income in their old age.
New
Hire Reporting by Employer
Effective
January 1998, the Personal Responsibility and Work Opportunity
Act of 1996 requires all employers to report information
on all newly hired workers within a specific time period
or incur a penalty. Each state has a designated agency that
is responsible for data collection and enforcement of the
requirement.
3)
Caregiver Injuries, Workers' Compensation
As
an employer in New York State, it is mandatory for consumers
to have Workers' Compensation Insurance. If no workers’
compensation insurance is in place and a worker sustains
an injury on-the-job, the liabilities can be significant.
Medical costs and disability payments for workers could
cause financial hardship for even a wealthy client. For
clients who cannot afford to pay, a caregiver could be left
with no help for a work-related injury. Many clients assume
that homeowner’s insurance will cover a domestic worker
injury, but in most cases, homeowner’s insurance usually
excludes coverage for this.
4)
Greater Potential for Abuse and Exploitation
Because
most consumers are not prepared or skilled in hiring and
managing caregivers, the potential for client abuse and
exploitation is increased. Most consumers will not or do
not know how to perform background investigations,
driving record checks, skill assessments
as well as the work necessary to obtain worker job references.
This can leave a loved one in the trust of a caregiver who
has not been fully screened. It is very easy to take advantage
of frail, aging and impaired clients. Inadequate or no screening
could subject clients to many abuses including financial,
physical and psychological.
5)
Case Supervision, Caregiver Supervision and Turnover
Most
consumers are not skilled or experienced in providing worker
supervision or case supervision. Worker supervision, worker
coaching/counseling, scheduling, coordination and worker
training are important benefits to both consumers and workers.
These value-added services are provided only by home care
agencies that hire their workers. For example, it is important
to review the changing care needs of a client. A full service
home care agency provides regular “care assessments”
and also provides competent supervision of both the worker
and the case. These are valuable services that can potentially
stave off or allow for the efficient handling of issues
or problems that can occur between client and caregiver.
For
example, in many private care arrangements the caregiver
is not experienced with the business matters associated
with providing home care services, such as caregiver
replacement scheduling, coordination and ongoing
care assessments. If a caregiver needs a break or time
off, who will search for a replacement? Who shows up when
your private caregiver is sick? What happens if your caregiver
quits? Do you have the resources to replace her immediately?
Most private caregivers are wonderful people, but they are
not experts at handling the administrative and management
tasks associated with providing home care services. It is
the consumer's responsibility to coach, counsel and manage
their worker.
Lastly,
there is a lot of turn-over (quits) and frequent call-offs
or no-shows by workers in the home care field. If a consumer
decides to hire someone privately instead of using a full
service agency, he or she must be prepared to manage these
issues. What will you do if your ‘private hire’
decides to quit without notice? It can take many days or
even weeks to find a replacement if you are not prepared.
A full service agency has many resources and skills that
they can turn to if turnover, no-call or no-show situations
occur with their client accounts.
Conclusions
-
Consumers need to be aware of the risks, responsibilities
and liabilities faced when they become employers.
-
Full
service agency home care is typically and justifiably
more expensive than care from an independent caregiver
because the agency provides all of the value-added
services that ensure your loved one receives the
safest, most reliable and best care possible.
