The process of managing payroll, withholdings and making tax payments for privately hired caregivers can be frustratingly complex and time-consuming. However, if you hire an independent caregiver to care for your aging loved one, you are a “household employer” and as a household employer you are legally required to undertake these tasks. Full details of independent caregiver employer’s obligations are available here.
Private employment agencies (less formally called nanny or caregiver payroll services) have emerged that greatly facilitate this process for families caring for elderly or those suffering from Alzheimer’s / dementia. For a minimal monthly fee, they can save families much time and frustration, keep all the affairs in legal order and importantly, facilitate the Medicaid application process should the need arise for care beyond which the family can afford.
Considering the amount of time that one saves, as well as the headaches that will be avoided, the cost of hiring a payroll service / private employment agency is very affordable. One should expect to pay approximately $200 / quarter. Perhaps, a more interesting calculation of the cost savings is when the cost of hiring an independent caregiver and a payroll service is compared to hiring a home care agency.
Home care agencies charge approximately 30% more than independent caregivers. In this example, a homecare agency charges $19 / hour for a senior caregiver, while if one privately employs a senior caregiver, they’ll pay $14 / hour. Let’s say the caregiver works 15 hours per week.
|Cost of Independent Caregivers & Payroll Services vs. Homecare Agencies|
|Homecare Agency||Independent Caregiver|
|Annual Cost at 15 hrs / week for 52 weeks||$14,820||$10,920|
|Payroll Service Cost (estimated)||n/a||$800 per year|
|Total Annual Cost||$14,820||$11,720|
|Cost Savings||None||$3,100 per year|