One of the first things that most aging clients state is that they want to be able to stay in their homes. Aging in place is also one of the main focuses of Life Care Planning in general, though the number one concern is that the client receives good long term care. As I have stated many times, when a client loses some functional capacity, the first thing that typically happens is that a parent moves in with a child or a child moves in with a parent. While that situation may work out for some people, over the long haul they face the difficult decision of having to hire outside caregivers to provide help with the parent’s needs or having to move the parent into a facility. If the decision is made the keep the parent in home and use paid caregivers, what steps need to be taken to make sure that the care is good, that the caregiver is trustworthy and that there will be no legal issues to be faced in the future?
There is no doubt that one of the first considerations that most families consider is the actual cost of the paid caregiver. The out of pocket costs can vary greatly depending on what type of care is needed. In general, most paid caregivers that are employed through agencies cost from $14.00 to $25.00 per hour and in most cases there is a four hour minimum. With the costs running so high, many families have started turning to the so called “gray market.” Gray market aides run roughly half of the cost of those hired through agencies. With the cost being more affordable, why would one not go with the more cost effective manner? There are many reasons.
First, there is no one who is actually supervising the gray market aide. At first glance, that might not seem like such a big concern, but the aide calls at 9:00 p.m. and says she is not going to be able to make it for the 11:00 p.m. to 7:00 a.m. shift, there is probably no one else to turn to at that point. On the other hand, if the aide had been hired through an agency, the agency should have the resources to supply a substitute.
Second, most gray market caregivers are untrained. This means that they do not necessarily have the knowledge of CPR, understand the proper manner for moving a loved one or even the simple things to look for to see whether the care receiver may be struggling with the chronic condition from which she suffers. The basic training that should have been completed can be the difference between life and death or between whether or not the loved one ends up with a bed sore. Also, many agencies will not allow their aides to drive the clients to doctors appointments, or anywhere else for that matter.
Third, the gray market aides are unscreened. Most gray market caregivers come to their employers through word of mouth. As such, background checks are rarely performed and these caregivers may have criminal records or be illegal aliens. Either of these two situations could cause great distress for the employer, ranging from theft to elder abuse to a crackdown by legal authorities. In one case that I am aware of someone had hired an aide to do work around the house, run errands and to take him to appointments. Since this aide was unscreened, the family was unaware that the aide had no drivers license until he was in an automobile accident. You can only imagine the issues that this family is now facing.
Though these are some of the issues that those employing gray market caregivers face, they can also have their positives. According to a recent New York Times article families “cite the loyalty of (these) employees and their ability to work unfettered by regulations.” As an example, there are agencies that will not permit caregivers to lift a client who has fallen prior to getting supervisory approval or calling emergency personnel. There are good reasons for such rules, but think about how you would feel if your helpless mother or father was just left lying on the floor.
As our society continues to age, these issues will only be exacerbated. There is no question that demand is beginning to outstrip the supply of paid caregivers. Currently, there is no solution to this problem. We can only hope that this industry takes on serious policing of itself or we may see many of the same issues in the homecare industry that have long plagued the nursing home industry. Many end users of paid caregivers do not see the potential problems that they may face through using gray market aides; they merely see a greedy middleman in the agency. One can logically see why that perception exists. In most cases, the caregivers themselves only see a marginal increase in wages when employed through agencies and their overall hours may not be as good.
While some consumers may see issues through using an agency, there are several good reasons to use agencies in addition to the ones previously mentioned. There are issues with workman’s compensation. If a gray market caregiver is injured while on the job and the employer does not have workman’s compensation coverage, then the employer is subject to a lawsuit regarding the injuries. Think about the stress and strains of helping to move people around. Additionally, there are the tax issues. As an employer, you are required to deal with the withholding of federal and state income taxes and FICA. You are also required to make the employers matching share of the FICA tax which is 6.2% generally. If these withholdings are not made and submitted to the taxing authority, the employer can face large penalties. The final area to consider is unemployment. If someone is hired into an open ended employment situation, then unemployment tax must also be paid.
While there are many items to consider, the number one concern must be for high quality, reliable caregivers to be available to assist with family members who need help with some of their activities of daily living. Care, compassion and loyalty are at the top of the list for characteristics for aides. Though these factors are important, for most families, the decision comes down to finances. The costs of gray market caregivers are almost certainly less than those employed through agencies, but one must always ask, are those savings worth the potential issues that I may face by taking on the role of the employer?
It is no secret that senior citizens are the wealthiest segment of the U.S. population. Much has been written and said about the trillions of dollars that will ‘change generational hands’ as the current seniors pass their wealth to their children/grandchildren. Unfortunately, seniors have to contend with a dirty little secret that was put in place by the current administration when they passed the Deficit Reduction Act of 2005 (DRA).
The DRA made changes in the way that the government will punish seniors for acts of both charity and giving. The Medicaid rules presume when a senior makes a charitable or family gift, that the gift was an attempt to get rid of excess assets in order to qualify for Medicaid nursing home expenses. That’s right—seniors are guilty until proven innocent. The burden of proof is on the seniors to show that when they gave money to their church or child, that they had some other reason than to qualify for Medicaid.
This DRA rule creates a cruel penalty of ineligibility for Medicaid services if and when a senior who gave away money needs nursing home services at any time within 5 years after the gift. Our government has created a punishment for seniors who may suffer chronic long-term illness within 5 years after a gift.
As long as this law is in place, seniors must remember that the IRS gift tax rule allowing gifting up to $13,000 tax-free is only a tax rule. Giving away $13,000 may cause a senior to suffer a loss in nursing home coverage of 2 to 3 months if they need such assistance within 60 months after giving that money away. Thanks to our government, giving may now be hazardous to your health…care!
Courtesy Rick Law, Law Elder Law, LLP