Saving a Few Dollars On Your Caregiver’s Wages Could Cost You Dearly
Courtesy Heaven at Home
All of us are interested in preserving as much of our money as possible. Therefore, it may be very tempting, if you have the need for a caregiver in your home, to hire directly from an ad in the paper, or an organization or church that you belong to. After all, you can almost certainly get someone to sit with mom for less per hour than you would have to pay an accredited agency.
However, the hourly wage that you agree upon may be only the tip of the iceberg. The first thing you have to do is determine whether you should classify your new hire as an independent contractor or an employee. The primary reason for this is so that the tax situation with the IRS and the State of Texas can be properly set up. We have all heard about the trouble that some of the politicians in Washington have gotten into because of the so-called “Nanny Tax”. Well, when you hire a caregiver directly, you also may be liable for the Nanny Tax.
There are many factors that determine whether a caregiver is an employee or an independent contractor. But, the simplest way to look at it is:
If the caregiver offers the same type of services to other people at the same time and make their own determinations regarding when they work and what they do, that caregiver will probably be classified as an independent contractor and should carry their own liability insurance and pay their own taxes.
If you tell the caregiver when to show up for work and what to do while there, they will most likely be determined to be your employee. And if so, there are some responsibilities you may have well beyond writing a check to the caregiver every week.
The state of Texas says that, if you pay a person over $1,000 per calendar quarter, you must register with the state within ten days and pay unemployment tax on those wages. However, you are fortunate to be in the State of Texas, because, unlike many states, Workers Compensation would only be voluntary on your part. But, you are required to have a poster displayed that contains information about Texas unemployment benefits, Payday Law and a schedule of paydays.
Another part of the Nanny Tax requires you and your caregiver to pay Medicare and Social Security taxes on a regular basis. And it is your responsibility to see that the deposits and taxes are filed and deposited in a timely fashion. You will need to get an Employer Identification Number from the IRS.
Did you know that the American Journal of Industrial Medicine says that 52 out of 1,000 home health care workers are injured on the job each year? That could leave you open to a lawsuit. At the very least, you should check with your insurance agent about adding a rider to your homeowner policy that will cover domestic help since most policies don’t automatically provide that coverage. And, if your caregiver may drive mom to her doctor’s appointment in your car, be sure those individuals are listed by name and driver’s license number on your auto policy.
Now, if your caregiver is injured, you have a couple of other concerns. How are they going to pay for food and mortgage while they can’t work? Who is going to take care of mom while they recover?
Scott Vanderhoef, founder of Heaven at Home senior care says, “Most people just don’t realize the potential pitfalls of hiring a caregiver directly. I know the cost per hour is greater to work through a qualified agency. But, we handle all of the tax and insurance requirements and take a position of helping to insulate our client from things like the potential of litigation. We have a staff of people which allows us to quickly replace a caregiver who, for any reason, can’t fulfill their job, whether it is just for a day or indefinitely. The difference in the cost of hourly wage that we charge can be considered sort of like an insurance against tax responsibility, the possibility of monetary loss, and the loss of services through unexpected developments.”
Of course, there are non-monetary considerations as well. Do you have the resources to do a thorough reference and background check on your candidates? Even if you hire someone from your church, unfortunately, that is not assurance that they don’t have something undesirable in their background. A good home care agency will do that investigation, as well as provide bonding for the caregiver.
Just don’t be too short-sighted when you consider something as important as becoming an employer to a caregiver into your home.
For more information you can reach Heaven at Home senior care at 940-380-0500.
