Home Care Companies VS Home Care ​Agencies

Home care providers fall into two distinct categories: The first category is a Home Care Agency, the second is a Home Care Company. Understanding the differences between the two models is critical when seeking care at home.

How a Home Care Agency Works

A Home Care Agency is a referral agency that finds and screens Caregivers and then refers Caregivers to people seeking Home Care. The Home Care Agency profits by charging an hourly fee to their clients for referring Caregivers. The Caregivers, who they refer and send to your home, are not  employees of the Home Care Agency, they become the client's employee. Regardless of what the Home Care Agency tells you the IRS most likely will consider the Caregivers sent from the agency an employee of the person who hired them which would be you the client.  Because you, the client, are the Caregiver's employer, the Caregiver is paid directly by you, not the Home Care Agency. To clarify exactly how this works the following example is offered:

​Mary recently fell at home and broke her leg. She is seventy years old and can no longer take care of herself. To help her through her recovery period, Mary decides to call a Home Care Agency and explains her situation. The agency then sends a Caregiver to her home to speak with Mary. The Caregiver explains that she will take care of Mary and she would directly charge her $12.00 per hour for her services. The Caregiver further explains to Mary that she would also have to pay the Home Care Agency that sent her an additional $5.00 per hours as a referral fee.
​In this example The total cost of hiring a Caregiver from an agency would be $17.00 per hour ($12.00 per hour paid directly to the Caregiver and $5.00 per hour paid to the Agency). 
​Please continue reading this model can cause you, IRS Problems, Payroll Tax Problems and expose you to Lawsuits.

How a Home Care Company Works

Home Care Companies, such as Home Care of Myrtle Beach, are drastically different from Home Care Agencies, such as Griswold, Home Care Helpers  and South Carolina Caregivers. Home Care Companies directly hire Caregivers, who become employees of the Home Care Company and are paid directly by the company. These employees are carefully screened and vetted. A Home Care Company's reputation is on the line every time a Caregiver arrives at a client's home. Reputable Home Care Companies such as Home Care of Myrtle Beach also supervise their employees to make sure they are performing up to the company's standards. Home Care Companies as opposed to Agencies cover their employees with Workers Compensation* Insurance and Liability Policies. Home Care companies also collect and pay all payroll taxes including unemployment insurance. Furthermore, HOME CARE COMPANIES PROTECT THEIR CLIENTS FROM LAWSUITS WHILE AGENCIES EXPOSE THEIR CLIENTS TO COSTLY LITIGATION and TAX PROBLEMS.
 *According to the owner of Home Care Helpers They Covers their employees with workers comp and theft Insurance but do not collect and pay payroll taxes  
​

Comparison

Home Care Agency
Your are the Caregivers Employer.

• Caregivers are paid directly by the clients they serve. Payroll taxes are not collected nor are they paid by the Agency. Workers Compensation
• Insurance must either be provided by the Caregiver themselves or the client must pay for a policy themselves. *see note below A person injured on the job could possibly file a lawsuit against the person they are caring for if  a Worker Compensation policy is not purchased. Caregivers are also expected to pay taxes on the money they earn, but seldom do which can present problems for their clients. Remember in the eyes of the IRS and the state you live, You are the Caregivers Employer.
• Referral Agencies do not maintain backup caregivers, the client must rely on the caregiver they hired. You hired a single Caregiver not a company that maintains a staff of Caregivers.
• Correcting problems with a Caregiver is the client's responsibly. Remember you are the Caregiver's Employer.

       When hiring a so-called Independent caregiver.
                                   You:

• Should register with the state as an employer
• Should apply for an Employer Identification Number
• Should collect and pay all payroll taxes.

*According to the owner of Home Care Helpers They Covers  their employees with workers comp and theft Insurance.

VS

Home Care Company
Caregivers are employed by the Home Care Company not you

• Caregivers are paid by the Home Care Company not by the clients, all payroll taxes are collected and paid by the Home Care Company. Workers Compensation and Liability Insurance are provided and all Caregivers are supervised. Clients are protected from lawsuits filed by Caregivers who become injured on the job because the Caregivers are not their employees. 
• Home Care Companies have numerous Caregivers and can rearrange the shifts of their Caregivers when necessary. Consistent care is much more likely from a Home Care Company than a referral agency.
• Correcting problems with employees is the responsibility of the company's management, not the client.  
• All payroll taxes and payroll issues are handled by the Home Care Company. Clients are NOT responsible for any IRS reporting.
• HOME CARE COMPANIES ARE THE CAREGIVERS EMPLOYERS. When you hire a so-called independent caregiver from an agency the you the client becomes the care givers employer.

Conclusion

From the prospective of an owner of a Home Care Company, the Home Care Agency option should be avoided by those seeking In-Home Care. Although the cost to hire a Caregiver through an agency is usually slightly less per hour than with a Home Care Company The Risk of Lawsuits, IRS and Payroll Tax Problems should be carefully considered. In addition to the legal problems that can occur from hiring a Caregiver through an Agency, the reliability and quality of care in most instances will be far better from a Home Care Company. The Home Care Agency Model in my opinion is nothing more than a way for a business to avoid paying  payroll taxes as well as paying for insurance.*
*Please think twice and perhaps consult an attorney before hiring a Caregiver through a Home Care Agency.
*Always Use A Home Care Company*