The Pros and Cons of Hiring a Caregiver Directly to Save Money

A recent study revealed that the cost of full time non-medical home care will average $45,000 per year in the state of Arizona (based on 44 hours of care per week). Given this, some families will try to economize by hiring caregivers directly rather than through an agency. Sadly too often the result becomes a classic example of the phrase “penny wise, pound foolish”. Thus, before taking this step, it is important that the consumer or family be aware of all the risks and costs associated with directly hiring their caregivers.

There are basically two areas that a family must address in the direct hire of a caregiver. One is the caregiver’s personal background and clinical skills. The other is the administrative costs of taxes and insurance.

First, consider what is involved in conducting a background verification of a caregiver. Once you have identified a potential candidate—in and of itself not always easy as you will need to conduct interviews—you will need to run a criminal background check, credit and DMV check, verify citizenship, verify their automobile insurance and the list of references. Also, if they are licensed (CNA or RN/LPN), you will want to know if the license is current, in good standing, and if there has ever been any disciplinary action taken against them. Finally, you will want to be sure they have no communicable diseases, specifically TB, have taken First Aid, and have a current CPR training certification.

Should all of the background verification go smoothly, you will then need to be able to determine the actual competency of the caregiver, especially if you are requiring special skills that will be needed to provide the care.

Are you qualified to do this? Do you really want to use your loved one to test that competency? Then suppose your direct-hired caregiver is sick, wants a day off, gets injured or simply doesn’t show for work. Will you be prepared with a list of qualified and trained alternate caregivers who can and will report on a moment’s notice?

The other area of consideration in hiring directly is taxes and insurance. The IRS states that individual employers are liable for Social Security and unemployment taxes on the wages paid to a direct hire. If you are considered to have “willfully” failed to withhold these taxes, you will be liable for not only the taxes but interest on the amount of underpayment and civil fines of up to $100,000 as well as possible criminal penalties.

And relevant to insurance: What if the caregiver is injured on the job? Back strains and falls are very common with home care. Will your homeowner’s policy cover it, and if so, will the policy limits be sufficient? What if the caregiver causes your loved one a serious, life-threatening or fatal injury? Will they have malpractice insurance that will compensate you for the costs? Finally, if the caregiver should break or steal any personal property, will they have a bond to reimburse you for the replacement?

All of these concerns are very real. Each can cost a family a considerable amount of money and possibly, should the worst occur, their lifetime savings. But most importantly, the safety and welfare of the loved one may be at risk unless you can ensure that all these steps are followed before allowing a privately hired caregiver into the home. Sure, the costs and time commitment of performing all these steps is probably more than you ever imagined, but do you really want to cut corners when dealing with the health care of your love one?

When considering all of the costs and risks associated with the hiring a competent caregiver, it becomes obvious that directly hiring may not be the most prudent route to follow.

But what is the alternative to direct hire? Hiring a reputable, experienced agency to provide the caregivers you need is the answer. The agency is then responsible for all the costs and risks associated with hiring, training, taxes and insurance. You are then able to give 100% of your attention and support to your loved one with the goal of them getting better or, at the very least, reaching maximum comfort.