But No One Can Agree on Whom to Hire.
Even when family members agree on an outcome, like finding someone to help mom stay at home, agreeing on how to make it happen can be painful. Truthfully, it often comes down to money and that is a volatile subject for many families.
The first thing family members need to understand is that Medicare does not pay for non-medical home health aides. Non-medical services focus on personal care. These services help with Activities of Daily Living (ADL’s) like getting dressed and bathing and Instrumental Activities of Daily Living (IADL’s) like meal preparation and housekeeping.
If your loved one needs this type of help and a family member is not available, then be prepared to pay for it privately. Let’s be clear on what privately means. Your elder or family members take on the responsibility of paying and it is not an insignificant amount. The typical hourly cost is $25.00 and don’t be surprised if there is a minimum number of hours. When dad was released from the hospital, my brother and I split the cost of having an aide six hours a week for the light housekeeping and laundry tasks he could no longer do.
If your loved one has Long Term Care insurance, check the benefits. Can the policy be used for aides in the home? What is the monthly payout amount? What is the wait period before insurance starts paying for the aide?
However the aide is paid, it is more costly to hire one from a home health agency than to hire one privately and pay for it “under the table.” It should come as no surprise that families are often split on which route to take. Sometimes the biggest push to hire the cheapest alternative comes from the person who needs care. They worry about having enough money to live out their life and/or want to leave a legacy to their children.
It’s no wonder that family members are split on whom and how an aide should be hired. From a strictly financial perspective, it seems like a no brainer. Go with the person your neighbor or cousin used to care for their family member. This “grey market” of caregivers is surprisingly large. Make one connection and suddenly you have several people to contact and interview.
But wait, there are HUGE risks in tapping into the grey market.
Financial Risks
Risking Medicaid
This is the biggest financial risk families take when hiring privately. Paying someone money to care for your loved one that is not an employee (more about this later) equals “paying under the table.” Medicaid does not consider this to be a legal disbursement of funds for the spend-down requirements. These monies will be counted as a ‘gift’ for the five-year look-back period required for government benefits. At the very least, you will be penalized and worst you could be disqualified from funding for care.
Tax
Hiring privately and legally means you are an ‘employer’ and required to pay Social Security, payroll and unemployment taxes. If you fail to meet this obligation, it may result in civil fines and possibly criminal penalties.
Salary
The Department of Labor requires aides to be paid for all hours worked. You cannot pay a flat, per-day fee so you need to keep track of hours with timesheets.
Hiring through an accredited agency meets the requirements for Medicaid as a legal disbursement of funds. In addition, the agency takes care of tracking all hours worked and tax issues.
Care and Liability Risks
You are responsible for the duties of the aide under your employment. Since the aide is not under the supervision of trained professional, you could face civil or criminal penalties if harm occurs. Ultimately, you are liable if the caregiver or the person they are caring for is injured.
Hiring through an accredited agency means your loved one will be under the supervision of an RN and the agency carries the needed insurance.
Exploitation and Abuse
Agencies are required to conduct complete background checks. These types of checks are costly, and typically more than most families know how to run. We all hear stories about abuse and camera’s in the home can help. But exploitation is harder for a family to identify easily. It may be a while before you realize that the caregiver is playing on your loved one’s emotions and receiving additional money of gifts beyond the agreed upon salary.
Hiring through an accredited agency means the person walking into your loved one’s home has been vetted to the best of the agency’s ability.
No backup plans
When you hire privately, a no-show aide means YOU are the backup plan for your loved one. It doesn’t matter if you hire an employee or pay under the table. If the person leaves, you are back to interviewing, background checks and bringing the new caregiver up to speed.
Hiring through an accredited agency means they will do their best to supply you with another aide as soon as possible.
Let’s be honest, the topics of caregiving and finances are emotional and making the decision to get mom help is not easy. Family disagreements on the best way to implement the decision can cause a rift that tears a family apart. I hope this information helps your family to work together as a team and come to an agreement on the best course of action.
With thanks to Caring Connections of NJ for their educational material on grey market hiring risks.
Disclaimer: The material in this blog is for educational purposes only. It is not intended to replace, nor does it replace, consulting with a physician, lawyer, accountant, financial planner or other qualified professional.
