When it comes to in-home care, hiring a caregiver yourself seems easy but is it always the best path?
In this episode of “Simply Money,” Mark Reckman breaks down what you need to know about hiring a caregiver and all the financial and tax implications involved in your decision.
Episode Transcription
Amy Wagner:
You’re listening to Simply Money tonight. I’m Amy Wagner, along with Steve Sprovach. I think one of the most difficult things to do as an adult is to watch your parents age and maybe get sick and question whether they can take care of themselves in their home anymore. And if that’s something that you’ve been through or are going through, tonight we’re talking to Mark Reckman. He’s our estate planning expert from the law firm of Wood + Lamping, about hiring a caregiver which, Mark, this is obviously a major decision that likely coincides with a very emotional time.
Mark Reckman:
It absolutely it does, Amy, and what you’ll find out is that most people would prefer to stay in their home as long as they can-
Amy Wagner:
Absolutely.
Mark Reckman:
… before moving into an institution. And that may, in many cases, mean hiring a caregiver.
Amy Wagner:
So let’s talk about the process to go through, because a lot of times, if you’ve never had to do this before, you don’t even know where to start.
How to Hire A Caregiver
Mark Reckman:
Well, that’s right. And there are really two choices in hiring a caregiver. You can either hire a caregiver directly, or you can go through a home health agency.
Amy Wagner:
All right. So let’s talk about the pros and cons of those. First of all, of hiring directly.
What Financial Considerations are Involved for Hiring A Caregiver Directly?
Mark Reckman:
Well, if you hire a caregiver directly, then you need to consider all the tax issues, the liability issues. You’re an employer in that case. You’re responsible for filing payroll taxes, tax forms, verify that the employee can work legally in the United States. If you pay more than $2,300 in wages in a year, you have to withhold and pay social security and Medicare taxes. If you pay more than $1,500 in wages in a year, you need to pay unemployment taxes. In addition, the caregiver may not, and generally does not, carry his or her own liability insurance or worker’s comp. So if you don’t provide those things, and you should, you are required to, but if you don’t and an accident happens on the job, you could be responsible and it could be costly.
Amy Wagner:
Okay, so that sounds like essentially starting a business. When you’re setting up payroll and thinking through taxes and insurance and things like that, that feels like a lot.
Mark Reckman:
That’s right. Now there are benefits, and the benefit of hiring a caregiver is that you have control over who you hire. You can choose someone that you feel is right for you and your family. Another benefit is that it’s usually a little cheaper, because if you use a home health agency, you’ve got to pay the agency to do all that paperwork. But as I said, being the employer has its problems. If your caregiver calls in sick or quits without notice which, Amy, happens all the time.
Amy Wagner:
Oh, I’m sure.
Mark Reckman:
Then you’re stuck. You’re stuck with the problem.
Amy Wagner:
You’re left high and dry.
Mark Reckman:
That’s right. And that’s a real issue. If you work full time, or if you live out of town, it’s a real imposition.
Amy Wagner:
You’re listening to Simply Money tonight here on 55KRC. We’re joined by our estate planning expert, Mark Reckman. He’s from the law firm of Wood + Lamping, talking through how you decide what kind of caregiver to hire if you have a loved one who might need help in their home. We talked through hiring one yourself. Let’s talk about the agency route and how that works.
Hiring A Caregiver Using A Health Agency
Mark Reckman:
Well, you can hire aides through home health agencies. In that case, Amy, the agency is the employer. So you don’t have to worry about the tax issues and the liability issues.
Amy Wagner:
Sure.
Mark Reckman:
The agency takes care of screening the employees. They do background checks. They provide insurance, like worker’s comp and unemployment. In addition, a licensed home health agency provides training, ongoing supervision of its employees. It can help the employees deal with difficult family situations or changing needs. The agency can also provide backup. If a caregiver calls in sick or is not available, it’s not your problem. The agency will get somebody else on site.
Mark Reckman:
Now there are downsides to using an agency. You won’t have as much input into who the caregiver is. In addition, caregivers will change or alternate, and that causes some confusion and can cause some disruption, and agencies are going to charge you more. What you find in Cincinnati is that agencies charge in the $22 to $25 an hour range. And you can hire your own caregiver directly for less than that. But of course, you’ve got to do all the paperwork and pay all the taxes. I think, frankly, that paying an agency the extra money to take care of all of that is well worth the cost.
Amy Wagner:
Yeah. Sounds like there’s less headaches there. Which route, Mark, because I know that you’ve helped hundreds and thousands of people make these decisions through the years. Which route would you say most people ultimately end up choosing?
Mark Reckman:
I’d say most people do use an agency. I would suggest, Amy, that that’s not where most people start. Most people think, “I can do this. I can find somebody-
Amy Wagner:
To save money.
Mark Reckman:
I can save this money,” and then they find out that it’s not so easy.
Can I Act As My Family Member’s Caregiver?
Amy Wagner:
What about this? And maybe I’m throwing something at you from left field here. But several, several years ago, my own grandparents, sick, wanted to stay home, eight kids. And so there was talk of each of them taking a turn, and one person maybe getting paid because they were going to be there a little more than others. It ended up being really kind of a mess, but I’m sure you’ve talked to families who are trying to do this on their own many times.
Mark Reckman:
I do. And there are many families who do it successfully. Unfortunately, there are more that find it not practical. And the reason it’s not practical is if you’ve got three, four, five kids that you’re going to divide this, somebody needs to coordinate all the pieces. They need to write the schedule. Somebody needs to be sure that the supplies and so forth are all on site, that the food is there that needs to be prepared. And when you’ve got that many people, Amy, not everybody’s available. There are people who have a full-time job, or maybe they have a disabled family member that they’re taking care of. Or Amy, not everybody is suited for this. There are family members who just can’t handle the personal care, and I’m not being critical.
Amy Wagner:
No.
Mark Reckman:
It’s hard. And it’s emotionally very challenging. There might be somebody in the family who’s great at paying bills, for paying the taxes, taking care of all the paperwork, but when it comes to changing mom’s diapers, they just can’t bring themselves to do it. And so there’s that wrinkle.
Amy Wagner:
And I think it’s a great point to make, Mark, because going into this, it might sound like, well, this is the way that our family can save money and us to spend some extra time with Mom and Dad, but I’ve also seen this kind of rip families apart, because if one person or a couple of people are all in, they feel like other people aren’t doing their part. It can get really ugly.
Mark Reckman:
And everybody’s got a different opinion about what’s the right thing. And they can be, and generally are, judgmental about people who do it differently. And that’s tension. That can create a big schism. I’m not a fan of that.
When is the Right Time to Get A Caregiver?
Amy Wagner:
Let’s talk also about how you know when it is time, because especially with a family, you might have people saying, “No, Mom and Dad are fine,” and others who say, “No, they need help.” So how do you really get everyone on the same page?
Mark Reckman:
Boy, that’s a tough one. Especially tough when you’ve got family members who are out of town. Because the out town family members more often than not, they’re a half a step behind what’s really going on. They’re a half a step behind understanding Mom and Dad’s real needs. And they frequently are the last ones to come to the decision. Their attitude is, “Well, everything’s fine when I come into town,” and the truth is everything is fine when they come into town, because their coming into town is an elevated event. It’s a celebratory event, and everybody gets up for it. And somebody in the family’s getting the house cleaned up and the parents cleaned up. And so when brother Jeff comes in from San Diego, it all looks rosy to him. And when he goes home, he doesn’t know what the problem is.
Mark Reckman:
So communication is the key. Regular communication and updates. It’s also really important for out of towners, we just have to give credit and we have to be open-minded to the input we’re getting from our siblings who are on site.
Amy Wagner:
Great insight tonight for any person, any family kind of heading down this road. If you have parents who are aging and maybe the question is, can they still stay in their home? How do you hire a caregiver? How do you make sure that they’re well cared for. Great insights from our estate planning expert, Mark Reckman from the law firm of Wood + Lamping. You’ve been listening to Simply Money here on 55KRC, the talk station.
Ready to Navigate the Aging Journey? Let’s Take the First Step Together!
Tonight’s insights are a game-changer for anyone embarking on the path of caring for aging parents. If you’re pondering whether your parents can still enjoy the comfort of home or grappling with the process of hiring a caregiver, we’ve got your back.
Our estate planning guru, Mark Reckman from the esteemed Wood + Lamping law firm, has dished out invaluable insights on ensuring your loved ones receive the care they deserve. Now, it’s time to put these pearls of wisdom into action.
Connect with us at Wood and Lamping, the law firm, and let’s embark on this journey together. Your family’s well-being is our priority, and we’re here to guide you every step of the way.
