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Homecare: The Differences Between Full-Service Agencies, Private Hire & Referral Agencies

February 11th, 2008 by Gilbert Guide
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Homecare, also known as in-home care, provides a caregiver to work in your home and help with activities of daily living (ADLs), instrumental activities of daily living (IADLs) and household chores. Some homecare aides accept clients who live in assisted living or skilled nursing facilities, and in those cases they work with their clients in the facility rather than the client's home.

There are three basic ways to go about hiring a professional caregiver. First, you need to decide whether to hire a private caregiver or go through an agency. There are two kinds of homecare agencies: referral and full-service. This article addresses the differences between all three options. Gilbert Guide also provides information on hiring private caregivers and working with agencies, along with detailed explanations of the services you can expect no matter how you hire your caregiver.

Full-service Agencies

Full-service homecare agencies take care of the major aspects of hiring a caregiver for you. It is in the best interests of these agencies to ensure that their caregivers are experienced, competent and a good fit for you, the client. Services normally include:

  • Prescreening employees for a criminal background
  • Checking multiple references
  • Providing worker's compensation insurance
  • Maintaining professional liability insurance or bond
  • Covering all payroll taxes
  • Supplying a caregiver when a hired one will be absent
  • Replacing a caregiver who isn't a good fit
  • Supervising caregivers

See Gilbert Guide's listings to find homecare agencies in your area. Before you start your search, read important questions to ask before signing a contract with an agency.

Referral Agencies

Referral agencies provide some initial screening and selection services, but once you hire a caregiver from a referral agency, your relationship with the agency ends. Referral agencies do not provide supervision of caregivers. Referral agency services usually include:

  • Prescreening employees for a criminal background
  • Checking multiple references

Your responsibilities, after finding a caregiver through a referral agency, will include:

  • Paying the caregiver directly and covering any related taxes
  • Insuring the caregiver and/or your personal items (Contact a local insurance agent to ask what protection an existing homeowner's policy offers. Ask for information about dishonesty bonds and worker's compensation.)
  • Supervising the caregiver
  • Finding a replacement caregiver if needed

Private-hire Caregivers

Private-hire caregivers are often hired by word-of-mouth recommendations. To get started, read tips on how to find, background check and interview a private-hire caregiver, review a downloadable Caregiver Employment Sheet and learn how to avoid fraud and abuse by in-home care employees.

Taxes and Private-hire Caregivers

Private-hire caregivers can work as independent contractors or as your employee. Tax laws change yearly; however, in 2006 any in-home employee who made less than $1,500 for the year is considered a contractor. Thus, a caregiver in this situation would use the IRS's 1099 form, which means that they are responsible for their own taxes at the end of the year. There is one exception: homecare workers who act as their own business with, for example, business cards, clients or a business license; even if he or she made more than $1,500, a person in this scenario would be considered a contractor. All other workers would be considered your employee and you would be responsible for withholding the proper amount of taxes from each paycheck. There is also a set amount for transportation costs ($105/month in 2006) and live-in costs, which are not calculated into the yearly sum. ElderCarePay and PayCycle both provide payroll software that you can use if you decide to go with a private-hire caregiver.

Tip: Specialized Dementia Care

Does your loved one require specialized care for dementia? Larger agencies can usually offer more applicants with specialized training in a variety of areas, as they have a larger pool from which to draw. To read more about dementia care, click here.

Posted in: Aging in Place, Alzheimer's & Dementia Care at Home, Hiring Homecare, Homecare, Homecare 101

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