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“The 5 Hidden Dangers of Private-Hire Home Care”


October 21, 2013 —

An educated consumer is a powerful consumer!  If you are considering hiring a home aide privately, please look out for the following issues…

 

1. Risk of Tax Liabilities.

When hiring a home care worker as a private employer, it becomes your responsibility to pay their state and federal payroll taxes, social security, Medicare, federal and state unemployment taxes.  Even if the aide you hire is an independent contractor, you will still be responsible for any and all of their tax obligations if they are unable to meet them for any reason. A breakdown of employer tax obligations as well as the worker's tax obligations is below:

Taxes paid by Employer

  • Social Security and Medicare Taxes (7.65% of Gross Wages)
  • Federal Unemployment Taxes (FUTA) (0.8% of Gross Wages or less in most cases)
  • State Unemployment and disability insurance taxes levied on employer
  • Advance payment of the earned income credit for eligible employees

Taxes paid by Worker (withheld and remitted by employer)

  • Social Security and Medicare (7.65% of Gross Wages withheld and remitted by employer)
  • Employee Disability/Unemployment Taxes
  • Federal and State Income Taxes

When the consumer is the employer and these taxes are not being withheld and/or paid, the consumer runs the risk of being sued by the government for back taxes. A consumer's estate can also be liened for back taxes, interest and penalties. If many hours of care have been delivered over time, this tax responsibility can be substantial. Authorities may also levy civil fines and pursue criminal charges for non-payment of taxes.

In addition, the Personal Responsibility and Work Opportunity Act of 1996 requires all employers to report information on all newly hired workers within a specific time period or incur a penalty. Each state has a designated agency that is responsible for data collection and enforcement of the requirement.

 It is necessary when hiring privately to consult with a tax specialist or an employment lawyer, which can become very expensive depending on the level of detail involved. 

 

2. Risk of Injury Liability.

Any person paying for a private home care aide would also be held liable for any injuries that the worker suffers while in the home.  This is a very critical cause for concern, considering the heavy lifting that home care duties often require.  As an employer in New York State, it is mandatory for consumers to have Workers' Compensation Insurance.   If no workers’ compensation insurance is in place and a worker sustains an injury on-the-job, the liabilities can be significant. Medical costs and disability payments for workers could cause financial hardship for even a wealthy client.  Not only would you as the employer of the private aide be liable for their injuries, you would also be liable for all costs and compensation for anyone else in your home that might be harmed were the aide to cause an accident.  The majority of homeowner insurance policies are also limited in their coverage of people working in the home, and in most cases, homeowner’s insurance usually excludes coverage for this.

 

3. Fraud and Loss.

The vast majority of home care aides are in the senior care field because of a genuine love of helping the elderly.  Unfortunately there are also some that see working with the elderly in a much less altruistic light.  Any quick Internet news search on the subject of private home care aides and senior fraud reveals cases of credit card fraud, personal property theft, and identity theft.  Many consumers do not know how to perform accurate background investigations, driving record checks, skill assessments as well as the work necessary to obtain worker job references. For example, a “free background check” online often only consists of a name and address match to a social security number and do not cover any potential criminal history or risk.  This can leave a loved one in the trust of a caregiver who has not been fully screened. It is very easy to take advantage of frail, aging and impaired clients. Inadequate or no screening could subject clients to many abuses including financial, physical and psychological.

 

4. Long-Term Care/Insurance Benefit Risk.

Navigating long-term care insurance requirements can be a dizzying prospect.  Every policy is different, and many long-term care companies require aides working in the home to be certified, along with detailed reporting and processing of your claims.  Not fulfilling the terms of the policy can result in non-reimbursement of home care costs.   When you hire privately, you can easily run the risk that the aide does not have the required credentials or training — this mistake can end up being very costly and create conflicts between you and your insurance company.

 

5. Lack of Supervision.

There are several risks when there is no third-party involved with home care services.

Firstly, most consumers are not skilled or experienced in providing worker supervision or case supervision. Worker supervision, worker coaching and counseling, scheduling, coordination and worker training are important to both consumers and workers.

In many private care arrangements the caregiver is also not experienced with the business matters associated with providing home care services, such as caregiver replacement scheduling, coordination and ongoing care assessments. In this arrangement, it also becomes the consumer's responsibility to coach, counsel and manage their worker.

Lastly, when directly hiring a caregiver, it becomes much more difficult to discover any issues or concerns that an aide may have with the case, as they will be very likely unwilling or uncomfortable bringing it up to their client directly.  There is also no backup system in case the aide is ill or otherwise cannot make it to your home.  The termination of an aide also becomes the client’s personal responsibility, and this can often lead to awkward situations.

CHECKLIST FOR PROVIDERS

  • Check with your State Employment Agency regarding workmen’s compensation and unemployment costs and procedures.
  • Check with you insurance professional for liabilities and accident coverage in your home.
  • Check with your financial professional or a tax specialist regarding tax issues associated with a private aide.
  • Arrange a back-up aide in case of primary aide’s illness or vacation.
  • Get multiple references from the aide and be sure to follow up with them.
  • Obtain a reputable and thorough background check.
  • If you have long term care insurance, check with the insurance provider for requirements needed for your policy.
  • Set up regular scheduled and unscheduled visits and calls to your home by a third party or another family member.





















































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