Paying Your Caregiver Under the Table
September 20, 2018
Hiring a caregiver is an expense, no question about it. Some families are lucky enough to be able to find the perfect caregiver among their circle of close family and friends. When finding a caregiver on their own rather than through an agency, lots of families prefer to pay the caregiver under the table because it’s cheaper than using payroll. And lots of caregivers prefer direct payments because they make more that way – wouldn’t we all prefer to make more money?
But here’s the problem with this arrangement. Or more precisely, several problems:
- Both the employer and the caregiver are committing tax fraud. You really don’t want to be caught for this.
- The caregiver, by not using payroll to pay into her Social Security history, is setting herself up for a lower Social Security payment upon retirement. This will make things a lot harder on her in what are supposed to be her golden years.
- The caregiver is not covered by worker’s compensation in the event of injury. That leaves her in a lurch if she gets hurt on the job. Or, it leaves the family in a lurch, as she can try to sue the employer to recover for her injuries.
- The caregiver is not covered by state unemployment benefits when the job ends.
No one wants to pay taxes, and payroll costs add to the employer’s financial commitment and reduce the caregiver’s take-home pay. But if you run the numbers to see exactly how much the cost changes would be for both the employer and the caregiver, hopefully you will decide that the cost is not as much as you expected, and the protections will be worth it.
As the employer, once you decide to start using payroll, you have options for how to manage that. If you are an organized person and don’t mind or maybe even enjoy “HR” type of work, you can run payroll on your own and submit the required periodic filings to the employee and the government. You can use QuickBooks or similar programs to help. If you don’t have the patience or stomach to do it yourself (I don’t), you can use any payroll agency that works with small employers. Care.com caters specifically to home-based employers. (I’ve never used them but love that they are a Massachusetts company.)
If you would like help determining the best way to manage payments to your caregiver, please call us.
Elder Care Workshop Series at Norwell Public Library
March 7, 2017
Are You Caring for Someone Who Wanders?
December 22, 2016
CMS (the agency that manages Medicare and Medicaid) recently put out this interesting FAQ piece on wandering. The piece is aimed at managers of day programs and assisted livings, but there are a lot of useful nuggets in here for people who are caring for loved ones still at home who tend to wander.
Open Your Home and Grow Your Family
December 1, 2016
The South Shore ARC is looking for families who would like to host under the Shared Living program. This is a state program that matches up adults with developmental disabilities with “host families.”
If you would like to open your home and your heart, please visit the ARC’s Shared Living page.
The Globe Made It Sound Like All of Our Seniors are Living Like the 1% and That Ticked Me Off
June 13, 2016
The Boston Globe Magazine wrote in its 1/31/16 issue of a Massachusetts building boom of senior care communities targeted essentially at the “1%.” You can see that article here.
I was ticked off at the tone of the article, to say the least. The author talks about the high-end senior living communities that developers are building in Eastern Massachusetts, because, well, some seniors through a combination of work and luck have accumulated that kind of wealth. The fact is, most Massachusetts seniors are patching together a network of care and services and doing their best to stay at home. The Globe Magazine published my comment, which you can read here.
The country needs a more comprehensive network of services for seniors, and Massachusetts needs to lead the way.
Michelle Singletary – She’s Done It Again
May 7, 2014
I love her columns, I really do. A few weekends ago, she nailed it once again. Read her column here where she tells older parents why they need to talk to their adult children about the care they would like as they age. Keep in mind that the cost figures she cites are national averages – and so, you guessed it, Massachusetts $$ numbers are higher.
I haven’t read the book she is suggesting, but if Michelle Singletary likes it, I’m sure it’s good.
Caregiver Contracts – Tax Benefits
April 30, 2014
If you would like to care for your parents full-time, or close to it, and your parents want to pay you for this, then there are some tax issues that you need to be aware of.
Most importantly, if you are providing hands-on care, making meals, doing the shopping, taking your parents to doctors’ appointments, etc., then you are an employee (as opposed to an independent contractor). And if you are an employee, then there are some rules that you need to comply with.
First, you and your parents need to report your income. Second, you and your parents need to pay taxes (they pay employer taxes, you pay income taxes). Now before you throw something at your computer screen, consider this: You want to pay payroll taxes. Why? Because FICA earnings will translate down the road into your own retirement Social Security check. Spending years working but not contributing to FICA can result in a lower Social Security check when you eventually retire. Same goes for Social Security Disability (SSDI) if you become disabled before 65.
Also consider this: Your parents can recapture part of the employer taxes they are paying in the form of a tax deduction – If they spend more than 7.5% of their AGI (adjusted gross income) on health care, then they can deduct health care costs. If they are paying for your many hours of care, in addition to other out-of-pocket health care costs, it is quite likely that they are spending over 7.5% AGI on those costs.
The payroll requirements for an employer are detailed. Rather than asking your parents to try to keep the records and handle the reporting to the IRS and DOR themselves, it is exponentially easier to hire a payroll company to take care of all the details for you. One payroll company working exclusively for home care situations is Care.com/homepay. I haven’t worked with them, but I think they are the only payroll company focusing on home care.
You can read here about what goes into a caregiver contract, and you can read here about how your parents can end up in big trouble later with MassHealth if they pay you without a caregiver contract in place.
Veterans: Are You Getting Older, Need Care, and Want to Stay at Home?
February 27, 2014
Good news! The VA has several programs designed to assist elderly and/or disabled veterans who want to stay at home for as long as possible. Listed below are some of these programs. They each have different eligibility tests regarding income and assets, minimum age, level of disability, service-connected rating, and geography. If you are interested in any specific program, talk to the outpatient social worker at the VA clinic that you use.
1. Three hours of home health aides per week.
2. Skilled care at home.
3. Adult Day Health – the VA has contracts with many local adult day health programs.
4. TeleHealth (a computer in your home permits a remote nurse to monitor basic health indicators on a daily basis).
5. Home-Based Primary Care. For the truly home-bound, veterans can receive home visits from a team consisting of the PCP, occupational therapist, physical therapist, social worker, and more.
6. Veterans Independence Plus Program (VIPP) provides a budget for a veteran to bring in the care he needs to stay at home, including home health aides, grocery delivery, snow shoveling, visiting nurses, etc.
7. Respite care, meaning that the caregiver can take a break while the veteran stays at the Brockton Community Living Center for 9, 16, 23, or 30 days.
These programs are available only to the veteran. If the spouse or widow of a veteran needs help staying at home, she should look into Aid & Attendance. If you would like further help exploring these programs or other resources to help you stay at home for as long as possible, please contact our office to schedule a Planning Session.
Aid & Attendance
February 20, 2014
Most of my clients need a little extra help around the house but aren’t sure how to pay for it. When we look at their savings and project how long those funds will work for them, the bottom line is usually this: If the client had just a little more cushion, they could stay at home with the proper supports for longer. But where can they find the money?
For many of the Greatest Generation, the answer lies in Veterans’ Benefits. There is a fantastic program that few seniors and their families know about: Aid & Attendance. Once you qualify, the VA will send a monthly check that you can use to pay caregivers, buy medical equipment, remodel a bathroom to be wheelchair accessible, pay rent at assisted living – whatever you decide is the best and most effective use of that money. This is the most logical, pragmatic long-term care program I know of. It helps seniors stay at home or in an assisted living residence – and out of a nursing home – for longer. All without limiting you to certain home health aide agencies, rolling deductibles, and a lot of the impediments that come with other support programs.
For 2014, the figures are as follows: If the veteran needs assistance, the maximum amount that he or she can receive is $1,759 per month. If the spouse is the one who needs help at home, he or she can receive up to $1,380 per month. A widow can receive at most $1,130 per month. If you both need care, you can receive up to $2,085 per month. These funds can help supplement home care, and they can also be very useful if you move to assisted living.
The application process for the A&A program is not for the faint of heart. There are reams of papers to fill out (of course), and it can take at least six months to receive approval. More to the point, the VA regulations are hard to find, and if you can find them, impossible to understand. More than almost any other government program, you will need an elder law attorney or a qualified veterans’ representative to walk you through the planning process. Without this help, it is very difficult to obtain the maximum benefits you are entitled to.
In order to assist you, an attorney must be “certified” by the VA and take requisite training. I have made it my business to become certified and receive the necessary education so that I can help my clients stay at home for longer.
If you would like to explore whether A&A can help you pay for your care, please call our office.
