What if I hire an independent contractor?

You may feel that hiring a caregiver privately will save you money and keep things simpler for your loved one, but be aware of the extra paperwork and legal responsibility this may bring. The law dictates that senior caregivers in the home are not able to be classified as independent contractors. Instead they are considered household employees. This differentiation is important for the following reasons:

  1. As an employee, the responsibility falls on the employer (you or your loved one) to withhold and file payroll taxes. Not doing so is considered tax evasion and you could incur severe penalties and charges.
  2. The senior caregiver could end up paying more in taxes if classified as an independent contractor because he or she will be required to pay self-employment tax. If they don’t keep up with paying estimated tax payments throughout the year, they could face penalties.
  3. By filing as an independent contractor, he or she will be disqualified from unemployment insurance.

What if I work with an in-home care agency?

The reality is, there are a number of reasons why it is more advantageous to use a reputable senior in-home care agency. Tax implications are not the only thing to consider. These are some of the other advantages to using an in-home care agency:

  1. The home care agency will be the employer, and will be responsible for paying your caregiver, including handling all of the tax concerns raised above.
  2. When hiring on your own, the process of background checking and verifying credentials can be overwhelming and cumbersome. The home care agency will conduct national background checks and do thorough investigations into the people they hire. This will include sex offender and motor vehicle records. You can rest assured that the person coming into your loved one’s home has been carefully screened.
  3. Law requires companies to employ only individuals who may legally work in the United States – either U.S. citizens or foreign citizens who have the necessary authorization. A licensed home care agency is going to verify this eligibility and ensure that the caregiver has a valid social security number.
  4. The home care agency is required to provide on-going supervision and training of the caregivers and ensure that their licenses and credentials stay up to date.
  5. The home care agency will provide both liability insurance as well as worker’s compensation insurance. This is important to consider since personal in-home care can often involve manual labor such as lifting and transferring, so the likelihood that the caregiver could be hurt on the job is higher in this industry than others.

Most senior caregivers become like a part of the family. So you will ultimately want to protect both your loved one’s interest as well as the caregiver’s. Using a reputable home care agency to manage and administer the employment side of things keeps things running smoothly. It helps the relationship to stay positive and allows you and your caregiver to focus on what is most important: the care and well being of your loved one.

About the Author: Pam Reynolds, CMC is the President and co-owner of Allegiance Aging Care Services. Pam has spent almost fifteen years working in senior care including long term care facilities and home health care. Her higher education is in Social Work, and she has been credentialed as both a certified Geriatric Care Manager and Licensed Assisted Living Administrator. Read more about Pam and her team of Aging Care Professionals here



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