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Senior Living

The Burgeoning Grey Market

The family agrees, your elder living alone at home needs help and care. What you can’t agree on is whether to hire a home health aide privately or from an agency. Before making the decision, it is important that family caregivers understand all the options and some of the pitfalls.

Medicare does not pay for home health aides. From a strictly financial perspective, insurance has limits of what it will pay, if anything at all. This means bringing help into the home requires ‘private pay’, that is, the elder (or the family) pays out of their own funds. With average fees of about $25.00+ an hour, most families think “What is the harm if we find a nice person to hire, a neighbor or friend we know to save some money?”

Over my years of working in this health care space, as a social work discharge planner prior to becoming Director for Springpoint at Home’s home care and care management services, I have learned and seen many of the pitfalls of hiring aides privately, what is referred to as the “grey market” in-home care.

Annette Murphy
Director Springpoint at Home

Salary and Tax Risks

The Department of Labor requires aides to be paid for all hours worked. You cannot pay a flat rate per day and be in compliance with labor rules. As the employer, families are required to pay Social Security, unemployment and payroll taxes. Failure to meet this obligation may result in civil fines and possible criminal penalties.

“I have personally seen families and Certified Home Health Aides (CHHA’s) who took private side jobs be fined as a result of routine audits.” Annette

Liability and Care Risks

The family is ultimately responsible for any liability due to an injury to the person being cared for or to the caregiver. Families are responsible for the duties of an aide under their employment. This means any harm that occurs without RN supervision (like that offered with an accredited home care agency) could result in civil or criminal penalties.

“There is also no back up plan for sick or time off. I’ve heard of the kindest and most dedicated private caregivers falling sick due to the work they are doing and, since they did not pay into social security and disability, they had few options but to sue their private family for compensation.” Annette

Abuse and Exploitation

A reference from a friend is not enough! Without a background check that all agencies are required to complete, the risks for manipulation and exploitation are markedly greater. An agency has an RN supervisor who oversees the staff to be sure they adhere to policies and watch for signs of boundaries being crossed.

“I have seen many instances of aides with families that adore them and now are now dependent upon them, raise their rates. They charge more per hour when the family goes away because they know they have no other options. Then there is the aide that starts to tell them more and more of their own personal stories about hardship and need, manipulating the situation to gain more money or items of worth. Families often give in as they don’t feel it is exploitation, but rather something this caregiver needs or ‘should’ have for the care they are providing. Boundaries are often crossed due to the very personal and close nature of the work. An agency will intervene and oversee any red flags of such behavior.” Annette

Financial Risks

The biggest risk that most families are now more aware of is the spend-down requirements for Medicaid. Paying money to someone under the table is not a legal disbursement of funds and will be counted as a ‘gift’ in look-back-periods for government benefits. The result is a penalty or even disqualification of funding for care.

“I have witnessed families being denied Medicaid and being forced to take their loved one home from rehab because the money was now all gone. They had no legitimate proof of where it went, resulting in no pay source for their loved one to stay in much needed nursing home care. They had to take their loved one home and care for the person themselves, disrupting their own lives.” Annette

“Home care agencies are not infallible, but there are many more risks to hiring privately.” Jennifer Fitzpatrick, “Cruising Through Caregiving; Reducing Stress of Caring for Your Loved One.”

In New Jersey, all home care agencies must be accredited as of June 2019. Now all agencies are overseen by the Division of Consumer Affairs, are held to a higher standard of protecting your rights and an RN oversees all care given in the home by an agency.

“If you would like to learn more please contact me at phone and email. I would love to connect you with more resources. I want you to have peace of mind and be able to focus on the most important role you have that of a family member and a support to your loved one.” Annette


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