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Should You Pay A Caregiver Under the Table or Use a Registry?

At some time you or your parents may need home health services due to an illness, accident or disease so that you can heal in your own home. The first question you will probably ask (if you don’t have a long term care insurance policy) is ‘how much will it cost me?’ While price is certainly a factor to consider there are other equally if not more important factors for you to evaluate.

Consider the following scenario: an elder asks their neighbor who they hired to help them when that neighbor was sick. The neighbor tells them it is someone they knew from their church who was trained as a home health aide, and it cost less than going through an agency. So the elder hires that person, pays them cash, and one day as the home health aide is assisting the elder transferring from the wheelchair to a chair at the kitchen table they both fall.  The next day the home health aide tells the elder they are injured and expects the elder to pay their medical bills and pay them for the time that they are unable to work.

If you think this sounds ridiculous think again because this could happen to you and you don’t want to be caught off guard. What will you do? Will you call your insurance agent and ask if your homeowner’s policy has coverage for something like this? Will you terminate the person?

There are advantages and protections with using a licensed home health agency rather than paying someone under the table. Consider this:

  1. Worker’s Compensation: A licensed home health agency provides worker’s compensation to its employees. This means that if the employee is injured while working at your house, they are covered by that insurance – you do not pay anything.
  2. Income & Employment Taxes: If you control when the home health aide arrives and leaves then they are an employee not an independent contractor. This means that you should be remitting employment taxes to I.R.S. and the home health aide should be reporting the wages as earned income on their income tax return. Failure to do so can result in penalties.
  3. Theft: If an employee of a licensed home health agency steals from you the company has a policy or a bond that will cover this situation.
  4. Training & Background check: A licensed home health agency will first conduct a background (criminal) check on a potential employee. They will also confirm that the person has received the necessary training, obtain documentation of their certification, and make sure they continue to meet state requirements. This protects you from someone that may not have the necessary skills to care for you or, has committed abuse.

Yes, it may cost a little more but aren’t you worth it? I recommend that you discuss these issues with a certified public accountant.

Note: A Home Health Agency treats their caregivers as employees. A Nurse Registry retains independent contractors. Registries do not make IRS payroll deductions, etc. and may not have the same assurances as an agency.

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