The Risks of Hiring of a Private Caregiver vs. Professional Options for Homecare

The Risks:

It’s well known that private home health care is expensive and sometimes difficult to obtain. Home care agencies not only charge by the hour, but they often have a three or four hour minimum shift requirement for RNs/CNA’s/HHA’s/PCA’s. People who live outside of the cities may find it difficult to find home health aides in their area.

Many families try to counter the cost of using a home care agency or Registry by hiring a private caregiver. In most cases, the caregivers are neighbors or friends, or may be someone who has worked for another friend. They are paid only for the hours they work, rather than for a minimum shift, and often the family pays less because they do not work for an agency and so you are not paying the agency markup. They sometimes have training as a home health care aide.

*There are significant risks involved in entertaining this option.

-No background checks.  If you hire someone on your own, are you confident they have not committed a misdemeanor or felony in the past?

-In most cases you are hiring a caregiver to be with a member of the family.  Exposing a family member to an unverified caregiver is putting them at serious risk of harm or improper care.

-Credential verification. Do they have the training they claim to have?

-Lack of liability insurance.

-Taxes; you are responsible to issue a 1099 to the caregiver for tax reporting purposes, or for withholding and paying employer and employee taxes and issuing a W2. Failure to do so could involve IRS fines and penalties.

Professional Options for Home Care.

The elderly and infirm have two more secure options for care, namely, home care and institutional care. For individuals who cannot care for themselves and lack the ability to meaningfully manage a caregiver relationship, the institutional option might be preferable.  For individuals who are able to manage their relationship with a caregiver, home care is often preferable.

For home care, consumers can choose between consumer managed care and agency managed care.  In many respects, these two options are very similar except for the cost. As a practical matter, all home care is largely consumer managed.

For consumer managed care, consumers can obtain a caregiver on their own, through a caregiver registry or from an agency.

Consumers often engage a caregiver registry for assistance in locating a caregiver. Caregiver registries generally offer the following services:

  • Background screening and credential verification of all registered caregivers;
    • Many caregiver registries screen to ensure that caregivers maintain their own professional liability insurance;
  • Access to a large pool of pre-background-screened and pre-credential-verified caregivers;
  • Administrative assistance in handling the billing and payment disbursement for services the caregivers provide; and
  • Assistance in communicating information back and forth between a consumer and caregivers and in mediating potential disputes.

Another source of home care is an agency. The principal difference between a registry and an agency is that the agency is, itself, a provider of home care.  As a provider of home care, an agency selects which caregivers to assign to consumers.  Caregivers employed by an agency work for the agency. Under the registry model, a registry is not a provider of home care.  Caregivers referred by a registry operate as self-employed independent contractors and work for the consumer, not the registry.

The following are some important issues to consider when evaluating an agency or a registry.

  • Cost. Since home care is generally offered at an hourly rate or at a daily rate for live-ins, it is very easy to compare the cost of home care provided by a caregiver obtained through a registry or from an agency. You should always ask this question.
  • Supervision. As a practical matter, home care is unsupervised. If a registry or an agency tells you that it supervises the home care, an important question you should ask is how often a supervisor will be at your residence to supervise the caregiver.  You should consider obtaining a written commitment to any promised on-site supervision.
  • Consumer Liability. Consumers who receive home care unavoidably expose themselves to potential tort liability, g., for a caregiver suffering an injury due to a defective premises or due to a negligent, reckless or intentional act by the consumer or a guest of the consumer.  Consumers generally can manage this risk by purchasing a rider to the consumer’s homeowner’s insurance policy or some other type of insurance.
    • While some registries and agencies often maintain insurance, such as general liability insurance or workers’ compensation insurance, and will mention that insurance to consumers as a sales tactic, an important question you should always ask is whether that insurance will protect you against potential tort liability attributable to a caregiver and – if the answer is yes – whether the registry or agency is willing to provide that assurance in writing.
    • Also, if a registry or an agency tells you that the caregivers are bonded, two important questions to ask are (i) whether the bond will pay only in the case of a criminal conviction, and (ii) in how many instances has a bond actually paid a claim to a client of that registry or agency. Any representations along these should also be obtained in writing.
  • Professional Liability. An important question to ask in all cases is whether caregivers maintain their own professional liability insurance and, if so, what are the policy limits.
  • Training. With respect to caregiver training, important questions to ask are:
    • Whether the firm provides the training itself and, if so, whether it has any certification to provide the training;
    • Whether the firm recognizes only training that a caregiver obtains from third-party formal training courses; and
    • Whether a caregiver will be permitted to perform services in a manner that the consumer requests, or whether a caregiver will be required to perform services in a manner that the registry or the agency dictates.
  • Caregiver Selection and Retention. Two important questions a consumer should always ask are (i) whether the agency or registry has the right to re-assign a caregiver who is caring for a consumer to a different client without the consumer’s consent, and (ii) whether the consumer has the unqualified right to cease working with a specific caregiver and obtain a replacement caregiver at any time and for any reason.  You should consider obtaining any assurance on these issues in writing as well.