In last week’s column, we discussed “hiring” family members to come to the house to take care of Mom or Dad when they are unable to care for themselves. The rules for hiring family members as caregivers are very complicated and it is easy to stub your toe resulting in unintended consequences. The rules for hiring non-family caregivers can be every bit as complicated, and if the rules are not followed precisely, may also result in unintended consequences.
But what if you are the primary caregiver and can’t quit work to care for Mom or Dad? None of your siblings are willing or able to step up to the plate and help out, even though they are more than willing to tell you what to do. Your only choice for keeping Mom or Dad in their home may be to hire non-family caregivers. Who are you going to choose?
Hiring individual in-home caregivers unwise. You’ve heard about some people who are looking for a job. These individuals would be happy to help out in Mom or Dad’s home and will work for cheap as an “independent contractor”. There are, however, some downfalls about hiring someone directly to take care of Mom or Dad instead of through a home care service agency.
Firstly, if you hire an individual, she generally does not have backups. If she gets sick, has car problems or has family issues, then you may end up having to take a vacation or personal day to care for Mom or Dad.
Secondly, many homeowners insurance policies that I have reviewed have special exclusions for injuries to individuals working in the home because those injuries generally should be covered by a workers compensation policy. In that instance, if the caregiver has a slip and fall in the home, the homeowners insurance will not cover it. When the homeowners insurance does not cover it, Mom, Dad or maybe even you, could be on the hook and be personally liable for the medical and other costs of the injury, unless you purchase a separate workers compensation policy to cover the caregiver.
Thirdly, if you do not complete criminal, credit, background and driving records checks, the caregiver that you hire may not be the most trustworthy. She may have a history of physical or sexual abuse. If she is not bonded and she steals anything from Mom or Dad or takes Mom or Dad to the bank to withdraw funds, you may not be able to recover the stolen amounts.
Fourthly, if you fail to verify the caregiver’s eligibility to work in the United States before you hire her, it could cost you. Most all in-home caregivers you hire directly are considered household employees under the Internal Revenue Code. As such, you are required to complete Immigration Form I-9 Employment Eligibility Verification, verify identification and verify eligibility to work in the United States. If you fail to complete the form and/or hire persons ineligible to work in the United States, you could be subject to criminal penalties and thousands of dollars in fines.
Lastly, since in-home caregivers are household employees, you may be required to withhold Social Security, Medicare, and Federal, State and local income taxes from their paychecks and/or pay the withholdings over to the taxing authorities on a regular basis. You may also have to pay employer payroll taxes including Social Security and Medicare to the tune of 7.65% of their gross pay. Federal and State unemployment insurance may also have to be paid, so when the caregivers are no longer working for you because they are either laid off or terminated, they can collect unemployment.
And if you don’t treat them as employees when you should, they may be able to come back years later and report you to the IRS and/or sue you for payroll taxes and withholdings that you should have, but failed to withhold or pay over on their behalf. In addition, there could be penalties and interest that the IRS would be more than happy to assess on those under-withholdings or under-payments.
Homecare agencies a better option. Are you willing to roll the dice by not following the rules when it comes to hiring non-family caregivers in the home? In most instances, the best and safest thing to do, and usually the most economical in the long run, would be to hire a home care service agency to care for Mom or Dad. Most agencies do extensive background checks and bond their employees. If the scheduled caregiver is unable to make it, the agencies have backup staff that can fill in at a moment’s notice and are on call 24/7.
These caregivers from the home care agencies are not your employees. They are employees of the service. You do not have to carry workers compensation or unemployment insurance or do withholdings or incur payroll taxes. You generally just pay a set hourly fee to the service and they take care of all employer expenses so that you don’t have to. All you have to worry about is Mom or Dad’s care. In addition, many long-term care insurance policies will pay for some if not all of these services in the home.
There was a rule change not too long ago requiring these agencies to follow the same rules as family caregivers that we discussed last week. However I have never seen or heard about this rule being enforced.
Homecare services available. There are a variety of services that you can hire out to these homecare agencies. These services could include:
- grooming and dressing
- light housekeeping
- recreational activities
- handyman services
- respite for family caregivers
- teeth brushing
- caring for houseplants
- medication reminders
- bathing or showering
- meal preparation
- incontinent care
- errands and shopping
- transportation services
- reading emails, letters, books, papers and magazines
- overseeing home deliveries
- laundry and ironing.
Choosing a homecare agency. It is estimated that there are over 120 agencies providing home care services in St. Clair County. You do not need to use the agency referred by the doctor or hospital discharge planner. Get other referrals. Pick a few agencies. Investigate them. Interview them. Get fee schedules.
Are they local? Do they have a local office? Only a fraction of the 120 agencies providing services in St. Clair County actually have an office in St. Clair County. Do they hire local people? Do they have a stake in our community? Find out which ones would be the best fit for Mom or Dad. With what services do you need assistance? Some agencies are better in some service areas than others.
By finding the appropriate caregivers to provide the appropriate services, you can keep Mom and Dad happier in their own home for a longer period of time.
By: Matthew M. Wallace, CPA, JD
Published edited April 24th, 2016 in The Times Herald newspaper, Port Huron, Michigan as: If family can’t be caregivers in the home