What to Consider When Hiring a Private Caregiver

Article Summary

This article provides an overview of the pros and cons of hiring a private caregiver or using a home care agency to support an aging loved one.

Key takeaways:

1. Agencies provide value for their cut, such as handling recruitment and vetting of caregivers, providing insurance for on-the-job injuries, and being bonded to protect against theft and loss.
2. Privately paid caregivers may be a better fit if you already know someone you implicitly trust for the position, or if you prefer to handle communication directly with the aide.
3. Caregiver registries can be a big help in finding private caregivers, and background checks should never be skipped.

1) Is a Privately Paid Caregiver Actually Our Best Choice?

Private caregivers tend to charge about 30% less than agencies – which is one of their main draws – however, agencies provide quite a bit of value for their cut.

Agencies typically:

• Handle recruitment and vetting of caregivers
• Provide replacement aides in the case of absence
• Handle payroll, taxes, and labor laws
• Provide insurance for on-the-job injuries
• Are bonded, protecting against theft and loss

In some circumstances, privately paid caregivers are a better fit for a family’s needs. For example, communication can sometimes feel cumbersome when dealing with an agency. They often have policies controlling how information or requests can be communicated to or from the caregivers. Although intended to keep everyone on the same page, these policies can sometimes result in frustration or inefficiencies.

In other cases, indirect communication can actually be an argument in favor of agencies – namely when you’re unsatisfied with a caregiver’s performance and would rather talk about it with a manager than the aide directly.

A privately paid caregiver may be a better choice if:

• You already know someone you implicitly trust for the position
• You prefer to recruit, vet, hire and manage the caregiver yourself
• You prefer to handle communication directly with the aide
• You don’t mind taking care of payroll, taxes and keeping your eye on labor laws yourself
• You won’t be in a bind if they need an unexpected day – or week – off
• Your loved one has particular needs, is difficult to work with, or requires a special touch that may be hard to find through an agency that sends different aides from time to time

An agency-based caregiver may be a better choice if:

• You don’t want the responsibility of recruiting, vetting, hiring, managing, insuring, scheduling, or finding replacements for the aide
• Your loved one has fairly straightforward needs or is able to talk new aides through the process of caring for them if needed. (It’s often possible to get a “regular” aide through an agency if you request it, which can reduce the need for this.)

Long Term Care Insurance

LTC Insurance policies differ widely. If you plan to use LTC insurance to pay for in-home care, read the terms of the policy carefully, or ask your agent, to ensure that your privately-paid caregiver’s service will be covered.

2) Where do Caregiver Registries Fit In?

Online caregiver registry platforms can be a big help in finding private caregivers. These platforms don’t employ caregivers, as home care agencies do. Instead, they provide a place for private caregivers and families to connect with one another.

Most registries charge a nominal subscription fee for the service. Payment, and other terms of employment, are arranged directly between you and the caregiver.

Some platforms offer perks such as pre-screening all caregivers listed in their registry.

Caregiver registries include:

• Urbansitter - all listed caregivers have completed background checks
• Care.com - all listed caregivers have completed background checks, and they provide tax and payroll support as well.
• HomeCare.com - listed caregivers have completed thorough background checks, including references and license verification (if license information is provided). They’re also licensed, insured, and bonded, and help provide backup caregivers when possible.
• Carina.org is a government-funded non-profit with no service fees. They include special support for Medicaid funding, however, they’re not available in all areas.

3) How Do We Know We’ve Found the Right Caregiver?

It’s incredibly important to find just the right caregiver to trust with your loved one – particularly if they’ll be unsupervised in the home, or if your loved one is frail, forgetful, or otherwise very vulnerable.

There are a few steps that are essential in narrowing down applicants.

Background Check

A thorough background check should never be skipped. Avoid the free, instant online background checks – they’re not reliable and most can’t legally be used for hiring. Look for a legitimate background check company that specializes in household employees.

1. The current general consensus is that one of the best background check services for household employees is eNannySource.
2. Verify any health care license information they provide with their state board of nursing (or other licensing agency) to ensure that they’re in good standing.
3. If driving will be part of their duties, you should check their driving record. Ask the caregiver to provide a DMV driving history report, or ask your insurance company to run a report on their license number. Read more about employing a caregiver with driving duties here.
4. Request at least three professional references and be sure to contact them all. Ask about how the caregiver did in their previous job, whether they’d hire them again, and if they’d recommend the person for a situation such as yours.

Multi-Step Interview

It’s good practice to interview your prospective caregiver at least three times to get a good sense of their personality.

1. Phone screening
2. In-person interview with those who pass the phone screen
3. In-person interview with your loved one present. Pay attention to how they treat your loved one. They should engage respectfully and with interest, without talking down or ignoring them.

Making the Decision

Once you’ve completed the interview and background checks it’s time to make a decision. Experience and training can be important, especially if your loved one has a condition that can be tricky to work with, like dementia, however it isn’t everything. Pay attention to your intuition when selecting the right fit for your loved one’s needs.

Trial Period

It’s a good idea to set up a trial period for the first week or so of employment to make sure everyone feels comfortable with the arrangement. (Read more about that here). However, keep in mind that it's normal to need a bit of an adjustment period for your loved one and caregiver to get used to each other, especially if your loved one has dementia or can be difficult to care for.

4) What are the Legal Considerations to Hiring a Caregiver?

When you hire a private caregiver, you’ll be the employer of a household employee with a number of legal responsibilities.

Eligibility to Work in the US

The caregiver must complete a Form I-9, Employment Eligibility Verification to confirm their eligibility to work in the United States prior to their hire date.

Written Contract

A written contract (often called a Personal Care Agreement) is essential for any caregiver being paid for their service, including family members.

Without a good contract (and complete financial records), payments may be considered gifts by Medicaid, which can affect eligibility for years to come. So, if they later need assistance paying for long-term care, Medicaid may not be an option.

Contracts are also essential should any kind of dispute arise. Even better, they can prevent many conflicts from coming up in the first place by ensuring everyone shares a common understanding of exactly which duties, hours and other details are being agreed upon.

Labor Laws

If a caregiver is paid more than $2,400 (in 2022) the IRS considers them to be a household employee covered by the Fair Labor Standards Act.

With a few exceptions for live-in help or companion care, most caregivers have to be paid minimum wage and receive time and a half for overtime (over 40 hours worked in a week). There are special laws for employees who sleep on the job as well.

Many states have labor laws that take precedence over these minimum federal standards, so be sure to check your state’s household employment laws.

Payroll and Taxes

Managing payroll and taxes for a household employee can be a challenge. You’ll need to submit earning information to the IRS each quarter, along with any withholdings the caregiver requests. As the employer, you’re also responsible for paying a portion of their employment taxes.

You’ll need to file a Schedule H and issue a W-2 form at the end of the year for tax reporting purposes. See the IRS Household Employer's Tax Guide for more information.

There are payroll services available online which take a lot of the headache out of the process and ensure you don’t overlook anything.

Caregiver payroll services include:

• Homework Solutions
• NannyChex
• GTM

Worker’s Compensation Insurance

Caregivers are at very high risk for injury on the job – and if they get hurt in your loved one’s home, your loved one can be held liable. Homeowner’s insurance coverage offers limited, if any, coverage, so you’ll need to purchase worker’s compensation for home healthcare.

Private Caregivers can be a Great Option, but Be Sure to Do it Right

Many family caregivers find it makes sense to let a home care agency handle the headaches of payroll, taxes, labor laws, and scheduling. However, others prefer the benefits of hiring a private caregiver directly. They have more control over the selection, communication, and management of the caregiver, without having to follow the sometimes cumbersome policies of home care agencies.

If you opt to hire your own private caregiver, take your time during the selection process to ensure you have the right fit, and be sure to follow all labor and tax laws to avoid potentially serious trouble down the line.

Author Bio

Laura Herman is an elder and dementia care professional who advocates for better senior care in America. This article has been reviewed by TJ Falohun, co-founder and CEO of Olera. He is a trained biomedical engineer and writes about the cost of healthcare in America for seniors.

Sources

7 Steps for Hiring a Caregiver for In-Home Help – DailyCaring

Background Checking: Resources That Help - Family Caregiver Alliance

Hiring an In-Home Caregiver - Private Home Care

Learn how to background check a nanny or caretaker | Exhale Parent

How to Prevent Caregiver Theft - AgingCare.com

Hiring an Independent Caregiver: Everything You Need to Know

In-home caregivers: Answers to tax and nontax questions - Journal of Accountancy

Tax Implications of Hiring Independent Caregivers - AgingCare.com