Hiring a caregiver for an elderly family member comes down to two paths: working with a home care agency or hiring someone independently. Each option carries different costs, legal responsibilities, and levels of control. The right choice depends on your budget, how much management you’re willing to take on, and the level of care your loved one needs.
Agency vs. Private Hire
The first decision shapes everything that follows. Hiring a caregiver privately, through word of mouth or an online platform, typically costs 20 to 30 percent less per hour than going through an agency. But that savings comes with strings attached. When you hire directly, you become the employer. That means handling payroll taxes, securing insurance, running background checks, managing scheduling, and resolving conflicts yourself. If your caregiver calls in sick, you’re the one scrambling for backup.
A home care agency handles all of that. You sign one agreement, and the agency manages background checks, liability insurance, tax filings, scheduling, and replacement staffing. If a problem arises, whether it’s lateness, poor performance, or something more serious, there’s a chain of command to report it to. The agency investigates and can provide a substitute caregiver immediately. For families who don’t have the time or experience to act as an employer, this convenience is worth the higher hourly rate.
What Caregivers Actually Cost
The 2024 national median rate for a home health aide is $34 per hour. Homemaker services, which focus on household tasks rather than personal care, run about $33 per hour. At 44 hours per week, that works out to roughly $77,000 to $78,000 per year. These are median figures, so costs vary significantly by state and metro area.
If you hire privately, the hourly rate will be lower, but remember to factor in the extras you’ll pay on top: employer payroll taxes, workers’ compensation insurance, and potentially liability coverage. Those hidden costs narrow the gap between private and agency pricing more than most families expect.
Choosing the Right Level of Care
Not all caregivers are trained the same way, and the type you hire should match what your loved one needs.
Home health aides (HHAs) help with daily living tasks like bathing, dressing, grooming, and eating. They also handle light housekeeping, laundry, meal preparation, and medication reminders (though they can’t administer medications themselves). For many elderly people who are generally healthy but need support staying safe and independent at home, an HHA is the right fit.
Certified nursing assistants (CNAs) can do everything an HHA does, plus monitor vital signs like blood pressure, temperature, and heart rate. They’re trained to observe changes in a patient’s health and report them to nursing staff. If your loved one has a chronic condition that requires regular monitoring, or if they’re recovering from a hospital stay, a CNA provides an extra layer of clinical awareness.
For needs beyond what either of these roles covers, such as wound care, injections, or IV management, you’d need a licensed nurse, which typically involves a home health agency operating under a physician’s orders.
How to Screen Candidates
If you hire through an agency, screening is handled for you. If you hire privately, thorough vetting is your responsibility, and it’s not optional when a vulnerable person’s safety is at stake.
- References: Ask for at least three, and call every one. Two should be from former employers. Ask specific questions about reliability, honesty, and how the caregiver handled difficult situations.
- Identity verification: Ask for a valid photo ID such as a driver’s license, passport, military ID, or green card.
- Background check: Use an online background check service (typically $10 to $100) or hire a screening agency that can run criminal history, including fingerprint-based checks through your state’s Department of Justice. Check the sex offender registry as well.
- License verification: If the candidate claims to be a CNA or licensed in any capacity, verify directly with the licensing body, such as your state’s Board of Nursing.
- Driving record: If the caregiver will transport your loved one, contact the DMV to verify their license status and driving history. Confirm they have valid auto insurance.
Some states offer additional resources. California, for example, runs TrustLine, a registry of in-home care providers who have been cleared through fingerprint-based criminal background screening. While originally designed for childcare providers, TrustLine also accepts eldercare providers.
Tax and Legal Obligations for Private Hires
This is where private hiring gets complicated, and where many families make costly mistakes. The IRS considers a privately hired caregiver your household employee, not an independent contractor. That distinction triggers a set of legal requirements.
If you pay a household employee $3,000 or more in cash wages during the year, you owe Social Security and Medicare taxes on those wages. If you pay $1,000 or more in any calendar quarter, you also owe federal unemployment tax. You’ll need an Employer Identification Number (EIN), which you can apply for free at IRS.gov. You’ll file Schedule H with your personal tax return to report household employment taxes, and you must issue a W-2 to your caregiver by the start of February the following year. Failure to properly file caregiver employment taxes is one of the top audit triggers the IRS flags for families who hire independently.
You’re also required to complete Form I-9 with your employee to verify their eligibility to work in the United States. And depending on your state, you may be required to carry workers’ compensation insurance. Requirements vary: some states mandate it for all household employers, others exempt certain situations. Check with your state’s department of labor or insurance commission.
Federal Labor Law Basics
Domestic service workers are covered by the Fair Labor Standards Act. You must pay at least the federal minimum wage ($7.25 per hour, though most states set a higher floor) for all hours worked, plus overtime at time and a half for anything over 40 hours per week.
There is one notable exception. Live-in caregivers, those who reside on your premises permanently or for extended periods (generally five or more consecutive days per week, or 120-plus hours), are exempt from the overtime requirement. You still owe them minimum wage for all hours worked, but not the time-and-a-half premium. This exemption only applies when the caregiver is employed directly by a family. Home care agencies cannot claim it, even for live-in workers, and must pay overtime regardless.
Putting a Written Agreement in Place
Whether you hire privately or through an agency, a written agreement protects both sides. The U.S. Department of Labor publishes a sample employment agreement for home care workers that covers the essentials. At minimum, your agreement should address:
- Job duties: Spell out exactly what the caregiver is and isn’t responsible for. This prevents misunderstandings about tasks like cooking, driving, or overnight stays.
- Schedule and pay: Include the hourly rate, expected weekly hours, overtime rate, and pay schedule.
- Benefits: Note any additional benefits like a transportation allowance, paid time off, or health insurance contributions.
- Termination terms: Define how much notice either party must give to end the arrangement. A common structure is one to two weeks’ notice, with severance pay tied to length of service (for example, one week of severance per year worked).
- Confidentiality: Include a clause requiring the caregiver to keep your family member’s personal and medical information private.
Having this in writing from day one sets clear expectations and gives you a reference point if disputes come up later.
Making the Transition Smoother
Even the most qualified caregiver needs time to learn your loved one’s preferences, routines, and personality. Before the first solo shift, spend a day or two together in the home so you can walk through daily routines, medication schedules, dietary needs, and emergency contacts. Show the caregiver where supplies are kept, how medical equipment works, and what your loved one’s baseline behavior looks like so they can recognize changes.
Check in frequently during the first few weeks, both with the caregiver and with your family member separately. Some older adults are reluctant to voice concerns directly to a new caregiver, so private conversations matter. If you hired through an agency, ask about their supervision schedule and how often a care coordinator will visit. If you hired privately, consider setting up a simple daily log where the caregiver notes meals, activities, mood, and any health observations. This gives you visibility into how things are going even when you’re not there.