According to recent research by the AARP, about 90 percent of seniors would like to stay in their own home as they age, even if they require day-to-day assistance with activities of daily living. With a rapidly increasing senior population, demand for quality in-home care is beginning to skyrocket.

In the past, in-home care was usually delivered by home care agencies, who would provide a home care aide, and take care of the back-end reporting and financial requirements. However, the cost structure is beginning to shift.

First, cases involving cognitive decline, such as Alzheimer’s disease, usually require round the clock care.  Caregivers who work for more than 40 hours a week are now required to be paid overtime by the home are agencies. Yet private employers are exempt from this overtime requirement. This overtime exemption can reduce the cost of care by almost 50%, resulting in savings of tens of thousands in one year. As a result, private employment of aides is beginning to increase.

Second, the home care agency usually keeps approximately one half of the income paid by the family. As a result, the family usually feels bad for the aide who is doing all the ‘heavy’ work, and wants to compensate the aide accordingly, cutting out the middleman.  

However, one must be very careful when hiring an aide privately. As an employer, you are required to pay unemployment insurance, withhold payroll taxes, pay household employment taxes, pay worker’s comp insurance, and may have to provide paid time off and paid sick leave. I have seen cases where failure to pay insurance on a privately hired aide led to a later payment of $100,000 claim by the elderly employer.

So while you may feel that the home care agency is unfairly withholding half of the aide’s compensation, remember that the home care agency is providing an important service. Unless you are prepared to act as a real employer, it may be easier to go with an agency and forget about the headaches.

Disclaimer: This article only offers general information.  Each situation is unique. It is always helpful to talk to a specialized attorney, to figure out your various options and ramifications of actions.  As every case has subtle differences, please do not use this article for legal advice. Only a signed engagement letter will create an attorney-client relationship.