Financial Considerations for In-Home Senior Healthcare
July 22, 2016
Increasingly, seniors and their loved ones are considering in-home healthcare in place of assisted living and nursing homes facilities when medical conditions call for additional help. In fact, in-home, private-duty senior care is one of the fastest-growing segments of the care industry.
If you are weighing options for a family member, one of the first considerations is to review what their insurance covers. Many seniors can qualify for assistance through long-term care insurance plans or Veterans’ Administration programs.
The recent Department of Labor clarification on the companion care exemption, for example, has increased the costs associated with engaging an agency for certain kinds of caregivers. It is important to understand all of the options and costs before making a decision to hire a caregiver.
Independent Contractor or Employee?
It is easy to understand why many individuals consider senior caregivers to be independent contractors—after all, they are being hired for private care in the senior’s home. It would follow, then, that payroll taxes wouldn’t be an issue. However, the IRS looks at it this way—if you or another family is controlling how, when and by whom the specified work is being done, the caregiver is classified as an employee. Therefore, payroll taxes must be paid. The IRS views the misclassification of a caregiver as an individual caregiver (Form 1099 instead of Form W-2) as tax evasion.
Senior caregivers are classified as non-exempt workers under the Fair Labor Standards Act (FLSA). Families employing caregivers should be aware of the following labor laws:
In general, families should be aware that there are many state-specific nuances, including daily overtime, paid sick leave and required mileage reimbursement with which they will need to comply.
Breaks Can Offset Cost Tax Burden
As long as families are paying a caregiver legally, there are significant tax breaks they can take to offset employer payroll taxes, including:
The following rules apply:
To learn about the pros and cons of long-term care insurance, read: Long-Term: Do You Feel Lucky? from Smith and Howard Wealth Management. If you or other family members need help in calculating the costs associated with in-home healthcare or complying with tax requirement, please call Smith and Howard at 404-874-6244.
If you have any questions and would like to connect with a team member please call 404-874-6244 or contact an advisor below.CONTACT AN ADVISOR
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