Hiring a private caregiver vs. using a home care agency in Pennsylvania

What is the difference between a private caregiver and a home care agency?

The big difference is who employs the caregiver, and who takes on everything that comes with being an employer.

• With a licensed home care agency, the agency is the employer. It screens, trains, schedules, supervises, pays and insures the caregiver, and works to send someone else when that person is off.
• With a private caregiver you hire yourself, your family is usually the employer, and those jobs are yours.
• A licensed home care registry is a third option. It matches you with caregivers who are often independent contractors, so some or all of the employer role can still fall to you.

All three can work. The right choice depends on how many hours you need, how much paperwork you are willing to take on, and how much a missed shift would affect your family.

How do the options compare?

Here is a quick side-by-side to help you weigh them.

You can check whether any company is licensed as an agency or a registry on the Department of Health's license search. Our guide to checking a Pennsylvania home care license shows you how in a couple of minutes.

Does hiring a caregiver directly make you an employer?

Usually, yes. The IRS says a worker you hire for household work is your household employee if you can control not only what work is done but how it is done. That is true whether the work is full time or part time, whether you pay by the hour, day or week, and even if you found the person through a referral list. The IRS specifically includes caretakers and health aides.

The exception is someone who runs their own business, decides how the work is done, and offers services to the public. And if an agency provides the worker and controls the work, the worker is not your employee. That is how it works with us: our caregivers are It's Your Home Care's W-2 employees, not yours.

What does a household employer have to do?

If you hire privately, here is the general checklist from the IRS household employer guide (Publication 926):

1. Verify work eligibility by completing Form I-9 with the caregiver by their first day, and keep it on file.
2. Get an employer identification number for your tax filings and the W-2.
3. Pay Social Security and Medicare taxes once wages reach the yearly IRS threshold. You withhold the caregiver's share and pay a matching share yourself, or you can choose to pay both.
4. Pay federal unemployment tax once total wages reach the IRS quarterly threshold.
5. Federal income tax withholding is optional, if the caregiver asks and you agree.
6. Report it all on Schedule H with your own tax return, and plan ahead with estimated payments so you are not short at tax time.
7. Give the caregiver a W-2, and send a copy to the Social Security Administration on time.
8. Keep records of wages and taxes for as long as the IRS requires.

Some family relationships, such as paying your spouse, your child under 21 or your parent, have special rules for some of these taxes. The thresholds change every year, so check the current IRS guide.

What does Pennsylvania add?

A few state questions sit on top of the federal ones:

• Unemployment compensation. The IRS tells household employers to check with their state about unemployment tax. In Pennsylvania, that is the Department of Labor & Industry. Registered employers file wage reports every quarter.
• Workers' compensation. Pennsylvania does not require it for domestic workers, but you can choose to cover them through an insurance agent. Without it, think carefully about what would happen if your caregiver were hurt lifting your parent or slipping on the porch, and ask your homeowner's insurance agent what your policy does and does not cover.
• State and local income tax. Ask the Department of Revenue or a payroll service whether withholding applies to your situation and your caregiver's town.

Many families who hire privately use a household payroll service. It helps with the paperwork, though the legal responsibility stays with your family.

Do minimum wage and overtime rules apply?

Usually, yes. Federal wage law covers most caregivers who work in a home. There is a narrow exemption families can sometimes use for "companionship services," but only when the work is mainly company and watching over someone, and hands-on care such as bathing, dressing or cooking is no more than 20 percent of the hours in a week.

Most caregivers hired to help an aging parent with personal care will not fit that exemption, so minimum wage and overtime rules apply. Live-in arrangements have their own rules; see our guide to 24-hour care vs. live-in care.

How do you screen a private caregiver?

Licensed agencies in Pennsylvania must interview caregivers, check references, run a state criminal background check (plus an FBI check for anyone who has not lived in Pennsylvania for the past two years), get a child abuse clearance, screen for tuberculosis, and confirm skills before a first assignment. Those rules do not apply when you hire on your own, so the screening is up to you:

• Interview in person, with another family member there, and ask about real situations: a fall, a parent who refuses a bath, a confused night.
• Call references yourself, ideally families the person has cared for.
• Request a Pennsylvania criminal history check through the State Police's online PATCH system, with the candidate's knowledge, and ask about any history in other states.
• Verify identity and work eligibility with Form I-9.
• Ask about training in personal care, safe transfers, dementia, CPR and first aid.
• Check a driving record and insurance if the caregiver will drive your parent.
• Write down the job: duties, schedule, pay, overtime, time off, and how either side can end it.

What happens when a private caregiver is sick or quits?

When a private caregiver cannot come, the shift becomes yours. You take the day off work, call a relative, or your parent goes without help. This is the most common reason families who start with a private hire later call an agency.

A licensed agency like ours works to arrange a substitute and tries to keep more than one trained caregiver familiar with each client. We will be honest, though: in outer and rural counties, substitute coverage depends on which caregivers are available nearby, and longer shifts are easier to fill than short visits. We will tell you plainly what is realistic where your parent lives.

Can you get paid to care for your own parent?

Many families ask this. If you simply pay a relative or friend yourself, the same household employer rules generally apply. And paying a relative privately for care usually does not create a medical tax deduction, as our guide on whether home care is tax deductible explains.

The main way adult children are paid to care for a parent in Pennsylvania is through Medicaid's Community HealthChoices. If your parent qualifies, they can direct their own care and hire a family member, with a payroll organization handling paychecks, or in some cases an agency can hire the family member. A spouse cannot be the paid caregiver. If your parent does not qualify for Medicaid, the Pennsylvania Caregiver Support Program may reimburse some expenses for unpaid family caregivers. Our article on becoming a paid caregiver for a family member has more.

Can you combine a private caregiver and an agency?

Yes, and many families do. Some common combinations:

• A trusted neighbor for errands and company, and an agency for bathing and personal care.
• A private caregiver on weekdays, and an agency for weekends, nights or vacations.
• Family care most of the week, with agency respite care on a regular schedule so the family caregiver gets real time off.

Whatever the mix, make sure everyone works from the same routine and medication reminder list, and that one person keeps the schedule.

How do you decide what is right for your family?

Hiring privately often fits when you need a few hours a week, have a specific trusted person in mind, live close enough to cover gaps, and are comfortable handling payroll.

An agency often fits when your parent needs personal care, longer or overnight hours, or coverage you cannot personally back up; when you live far away; or when long-term care insurance or a state program is paying and requires a licensed provider. Some long-term care insurance policies pay only licensed agencies, so read your policy before you hire.

It's Your Home Care is a licensed home care agency, not a registry, so every caregiver is our W-2 employee. We handle payroll taxes, background checks, ChildLine clearance, TB screening and skills training before anyone is assigned. We write a care plan with you and introduce the caregiver before the first shift when schedules allow.

If you are weighing your options, call us at (717) 695-2704 or request a consultation. Our questions to ask a home care agency are a good list to have in hand before you call anyone, including us.