Page Reviewed / Updated – September 22, 2020

Introduction & Definitions

Once a family has made the decision to hire a caregiver for their elderly loved one, they are faced with the question of whether to hire an independent caregiver or to use a home care agency. This article will explore the pros and cons of both approaches with the goal of helping families make the right decision for them and their situation. First, however, it is helpful to have a clear understanding of the differences between an independent caregiver and a caregiver who is hired through a home care agency.

Home care agencies are licensed businesses that employ caregivers and send them to the home of your loved one to provide in-home care. They can provide medical care or non-medical care. Professionals, such as nurses or nursing assistants, provide medical care. Non-medical care, also called personal care or custodial care, consists of assistance with the activities of daily living, such as preparing meals, eating, and bathing, and can be provided by persons without professional training.

Using an independent caregiver can save a family 20%- 30%. However, the family must take on the responsibility of being an employer. 

Independent or private caregivers are employed directly by the family. There is no intermediary agency between the care recipient and the caregiver. Independent caregivers are also able to provide medical care (if trained to do so), but this is much less common. Independent caregivers are more likely to provide personal care. Families who hire independent caregivers must take on the responsibilities of being an employer or use a 3rd party payroll management service. But, by taking on this employer role, rather than going through an intermediary agency, they can save 20% – 30% on home care costs.


As mentioned before, home care agencies are more expensive than independent caregivers. Nationally, the average hourly rate for home care through a home care agency in 2019 is $21 per hour. Independent caregivers are paid 20% – 30% less than home care agencies; they receive $15 – $17 per hour. There are significant state and regional differences in the hourly cost of home care. However, the difference between home care agency costs and independent caregivers’ costs remains relatively consistent throughout the 50 states.

A 20% – 30% savings in the hourly cost may sound like a significant difference, but there are factors that must be considered in order to gain a more accurate estimate. Most relevantly, is the hidden cost of being an employer, which one must be to legally hire an independent caregiver. The hidden cost may be thought of as additional hours the family must put forth in the hiring, managing, and making of payments to the independent caregiver. There are services that manage caregiver payroll. They greatly simplify the complicated process of deducting Social Security and other taxes. But a family still must hire and manage the independent caregiver.

Types of Care

The types of care and support services that can be provided in the home is very broad, ranging from medical care, like injections, wound care, and monitoring vital signs, to simple assistance with the activities of daily living, like eating, and helping with bathing, dressing and grooming. Non-medical caregivers can also provide assistance with the instrumental activities of daily living, such as shopping, housework, and running errands.

Both home care agencies and independent caregivers can provide either home health care or non-medical care. However, if it is home medical care that a family is seeking, there is a much greater challenge in finding an independent caregiver who is professionally training and licensed. As a result of the added difficulties associated with medical care (and the added liabilities), most families tend to use home care agencies for this purpose.

Independent caregivers have the advantage when it comes to providing a wider range of non-medical care services. Home care agencies tend to have stricter rules about what a caregiver can and cannot do. While independent caregivers are not subject to the same restrictions. As an example, an independent caregiver could drive the care recipient around for appointments, errands, and social activities. But a home care agency might prohibit their caregivers from doing so. This also means that an independent caregiver may be better suited for providing companion care. Or, in other words, simply serving as a friend to an isolated elderly person living at home alone. They can change light bulbs, go grocery shopping, or take the care recipient to a movie. In fact, the flexibility of support that an independent caregiver can provide is often the very reason families will choose to work with an independent caregiver rather than a home care agency.

Quality of Care

One might assume that due to the additional licensing requirements to which home care agencies must adhere that caregivers via home care agencies provide a higher quality of care. However, the authors believe that the quality of care provided is dependent on the individual providing care. There will be independent caregivers, as well as caregivers from home care agencies, that provide excellent care. And there will be individuals from both options who provide less attentive care.

A difference between these two options that is worth mentioning is that when a family working with a home care agency decides they are unhappy with the quality of care they are receiving, they can simply request a different caregiver from the same home care agency. In contrast, families who have hired an independent caregiver and are unhappy with the quality of care must go through the process of searching for, hiring, and training a new independent caregiver.

Ease of Hiring

The ease of hiring the caregiver is one of the bigger differences when working with a home care agency vs. an independent caregiver. When looking for a home care agency, it is a very simple process. There are many free matching services available, including one offered by our organization. Finding an independent caregiver, on the other hand, can be a challenge. It is analogous to hiring an employee. One must write up a job description and post that description in various locations. Alternatively, one can ask family or friends or search through pages of Craigslist and other local postings. The family and the care recipient will want to meet with the caregiver to “interview” them, and many interviews may be required. Earlier in this article we mentioned flexibility as one of the main reasons families hire independent caregivers. However, the difficulty in finding independent caregivers is one of the main reasons families opt for home care agencies instead.

It should be mentioned that over the past few years several web-based, startup organizations have tried to make the process of hiring independent caregivers much easier. Unfortunately, there is also a long list of failed organizations that have tried to solve this problem. If and when our organization discovers a business that has solved the challenge of finding an independent caregiver, this article will be updated with that information.

Legality, Taxes & Deductions

There is a false perception that hiring an independent caregiver is somehow illegal. This is not the case. However, paying an independent caregiver under the table is illegal. Also, it’s important to note, paying the caregiver under the table is not in the family’s best interest because it is highly likely that by doing so, the family is missing out on some tax benefits.

Families used to have the option of hiring the caregiver as an independent contractor (and therefore, the family would not be responsible for payroll taxes, withholdings, etc.). However, this is no longer an option for families, as the IRS has recently ruled that caregivers must be classified as employees, not independent contractors.

One reason families may choose to pay a caregiver under the table is because they perceive the process of managing employee payroll and withholdings to be complicated and time-consuming. While it is true that payroll logistics are confusing, the reality is there are inexpensive options that manage the entire process on the family’s behalf. Furthermore, these third-party services educate the family in regards to how and when payments to their caregivers are tax deductible. Free consultations are available to explain the processes of hiring and managing payroll for independent caregivers. More.

The Medicare Factor?

No article about home care would be complete without some mention of Medicare as a source of payment. Neither independent caregivers nor home care agencies have an advantage with Medicare. To be clear, Medicare does not pay for non-medical home care regardless of if an independent caregiver or a home care agency is used. Thus, Medicare should not be a factor in anyone’s home care agency vs. independent caregiver decision. That said, some Medicare Advantage plans, which offer an alternative way to receive Medicare benefits, may now cover the cost of non-medical home care in specific cases.

With Home Health Care, Medicare will pay (in some cases when it is medically necessary), but Medicare will pay either a home care agency or an independent caregiver. 

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