Becoming a professional caregiver: taxes, liability, workers comp, insurance, etc.


I understand this is probably the wrong place to post this, but I was hoping that I might get some insights from some of you who have hired private caregivers in the past. I have worked with the elderly in various settings for 7 years, and I am interested in becoming a private caregiver.

My biggest concern is trying to alleviate as much responsibility and liability from potential clients as possible. Ideally, I would like to make it so that I am responsible for all taxes and accountable for any injuries that may occur to me or my client if one of us is injured while I'm providing care (ex: getting hurt during a transfer in/out of shower).

My understanding is that when someone hires a private home care aide, that person is technically the employer. Because of this, they are responsible for all taxes, worker's comp, and liability. So if I were to get injured while working in someone's home, then that person would be liable for any medical bills or disability coverage depending on the severity of the injury.

I also read if a client is injured while a home care aide is providing care for them, that the client is still responsible for all compensation and costs resulting from the injury because they are considered to be the employer. Is this correct?

Does anyone know what I can do to make it so that these responsibilities/liabilities fall on me instead of my clients?

Hoping someone can add some clarity and assistance with all this. Thanks!

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Just for the record, I've contacted my county (Santa Cruz) about getting a business license to work as a private caregiver, and they were somewhat perplexed by this. They had never heard of anyone doing that before...most likely because people either go through a home care agency or people pay their caregiver under the table.

They thought that if I got a CA business license and a home occupancy permit then I would be okay, but they weren't really sure. It just doesn't seem worth it because after getting done paying for these fees, I'd have to pay for liability insurance fees, bonding fees, taxes, etc.

On top of that, I'd have to handle all the paperwork, contracts/agreements, billing, documentation, etc. And even after setting it all up, there would still be a lot of questions regarding who is liable in what situations. This is where I'd have to ante up some more money to talk to a lawyer.

To me, it just feels excessive. With all the fees and paperwork I would be responsible for, I would have to charge my clients more than home care agencies do in order to make it worth my time. I just wish there was an easier way.

I'd really appreciate it if anyone can share their insights or experiences with hiring or becoming a private caregiver. Thanks again to those of you who have responded thus far! It's really a stressful process trying to figure it all out on your own.

Thanks for all the responses everyone! I first wanted to respond to pstiegman:

"If the client is injured, the caregiver can be sued for negligence." This is where my research suggests otherwise. Let's say you need some assistance and want to hire your own caregiver, thus, eliminating having to go through an agency. Once you do this, you are considered the employer.

Therefore, if you get hurt while the caregiver is helping you, then the employer (you) is liable not the caregiver. If you are going through a home care agency and you get hurt while a caregiver is helping you, then the home care agency (employer) will get sued rather than the employee.

Maybe I've misunderstood something along the way, but it seems to me that the system is currently designed put clients at a huge risk if they decide to hire their own caregivers directly.

By the way, you are not required to get licensed or certified to operate a non-medical home care business in CA.

Here's a list state by state of the requirements:

If the client is injured, the caregiver can be sued for negligence. We live in a sue-happy world, so don't go thinking you are impervious to lawsuits.
California has a certification and licensing program:

Most states have licensing boards for health care providers, so that would be a start to be accredited or listed within your states board. I would imagine that in order to get any kind of liability, you will need some sort of licensing to show expertise to be a caregiver. If you want to get bonded, that is pretty easy, you just have to put up a % of the money you need to be bonded to and then they run a credit check or other background to make sure all is OK there. But getting bonded is pretty straightforward simple.

I think the hardest thing to get will be any type of indemnity agreement insurance. It sounds like you want to be self-funded on that and it will require a good bit of income or assets to be able to qualify and will be expensive. If you aren't signed up for ACA, I'd look into signing up for that asap to at least take care of your health insurance needs.

Really you are starting a business and need to do whatever your state & city or county require for any business. SBA has a program nationwide called SCORE that does classes for people starting businesses. They cover taxes, local issues etc and the classes are free. Just google SCORE and your city to see what's what. If you are in an enterprise or a GO-zone, then there probably are lots of other programs available and underwritten by federal $'s for new biz.

Or you could go an work for a home health company for a couple of years and learn from them what to do or not to do.

I would like to have a care giver like you but fear the consequences of a worker as well; filing a work comp, paying all the taxes for them, etc. I hate to go through an agency paying so much more. I wish I had an answer for both of us.

By the way, I've also read that home care aides do not qualify as independent contractors; therefore, this wouldn't be an appropriate solution in trying to alleviate tax responsibilities from future clients.

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