How to Reduce Costs & Preserve Assets While Hiring Home Aides Directly
Via Care Concierge NY Versus an Agency
An Educational Case Study for You, Your Spouse & Your Parents
By Aaron D. Schindler CFP, Cofounder, Care Concierge NY
www.careconciergeny.com
Oct. 12, 2017 –
In 2016, the Journal of Aging Life Care stated that based on today’s costs of care, roughly 15 percent of us will need eldercare costing in excess of $250,000. “These figures do not include the significant financial and emotional costs of the large portion of care that is provided by unpaid family caregivers.”1
When we think of eldercare, most of us automatically think of people age 65 and older. However, one must also consider the children of parents requiring homecare. These could well be 40-to 60-year-old daughters and sons with full-time jobs and families whose own careers and finances could be derailed by the need to take a leave of absence to care for a parent who can’t live on his own nor afford to pay for homecare. In 2009, the National Alliance of Caregiving reported that 47 percent of working caregivers indicated an increase in caregiving expenses that had caused them to use up ALL or MOST of their savings.2 `Acting as a caregiver to a parent and caregiving expenses can cause financial stress on multi-generations of the same family.
The case study below offers tips for a topic rarely discussed – hiring quality home aides legally at reasonable rates. I will demonstrate how you can save substantial sums of money and preserve assets by hiring home aides directly via Care Concierge NY’s home aide pool versus through an agency.
*Case Study: Jerome, 70-Years Old
Jerome, who was diagnosed with Alzheimer’s four years ago, has required full-time homecare for two years. Two years ago, his net worth was $1.7 million, all in investment accounts, with $1.3 million in his IRA and $400,000 in his non-qualified account. Three months ago, Jerome’s 44-year old son Gabe, a current client, expressed his bewilderment to me that Jerome’s advisors were distributing $300,000 a year from Jerome’s IRA to pay for living and home aide expenses even though Jerome rarely leaves home. Gabe wanted to know where the money was being spent and why most if it was taken from the IRA. He was extremely concerned that his father would rapidly depleting his remaining $1.1 million.
After reviewing Jerome’s income, budget and daily home aide wages, I discovered that Jerome was paying a homecare agency $450 a day for two live-in home aides each working 3.5 days a week. When I told Gabe that my family pays each of my mom’s three live-in aides an average blended rate of $300 daily, he asked how could there be such a discrepancy in pay rates?
The answer is that aides hired through an agency are typically employees of the agency. Agencies, as third-party employers, typically charge clients a mark-up of $100 to $300 a day above what they pay their home aides. 3
The agency mark-up on hourly home aide rates is also significant. It is typical for agencies to charge a client $25-$40 an hour for aides working 12-hour shifts yet pay the aide $11 – $12 an hour. One can typically hire an aide directly at $12-$15 an hour. Thus, a client hiring an aide directly at $15 an hour will typically save a least $120 per 12-hour shift or $3600 a month.3
In order to save Jerome significant money, we suggested that he hire home aides directly versus via an agency. Care Concierge NY, along with his geriatric care manager, restructured his home aide rotation to include three versus two full-time aides to reduce overtime hours. The direct employment of three aides hired legally on Jerome’s own payroll reduced the average daily pay rate by approximately $160 a day or $60,000 a year. We also reduced expenses by working with a geriatric care manager to create a revised plan of care, including purchasing prescription drugs by mail and ordering groceries for delivery from Fresh Direct.
Many people prefer to hire aides via an agency because agencies background check their employees. However, Care Concierge NY provides clients access to a large pool of independent, background-checked home aides. We screen and match home aides to a client’s needs. The client hires the home aide directly and pays concierge fee. The client can still save substantially by hiring direct after amortizing the concierge fee and payroll costs over three to four months.
Each homecare situation has its own nuances and it is important to abide by Department of Labor laws, including federal and state payroll and insurance requirements. NYS Department of Labor fines can be stiff. For example, failure to provide Worker’s Comp Insurance can amount to a $200 a day fine.4
Early financial planning plus understanding how to implement homecare (work with CCNY’s geriatric care manager network to create a plan of care and directly hire background-checked home aides via CCNY) can allow a loved one to age gracefully in place at home while preserving assets for future generations.
If you would like to schedule an appointment with Care Concierge NY, please feel free to contact us at info@careconciergeny.com. Please feel free to share this newsletter with friends and relatives interested in eldercare planning or homecare.
*The case study is a hybrid of the actual homecare experiences of multiple clients. Some names and details have been changed to protect privacy.
- Services and Supports for Older Americans: Risks and Financing Research Brief, U.S. Department of Health and Human Resources, by Judith Dey, Office of the Assistant Secretary for Planning and Evaluation and Melissa Favreault, Urban Institute, February 2016.
- Family Caregiving & Out-of-Pocket Costs: 2016 Report, by Lauren Mehegan, Chuck Rainville and Laura Skufca, AARP, November 2016.
- Evercare Survey of the Economic Downturn and Its Impact on Family Caregiving, National Alliance for Caregiving and Evercare, March 2009.
- Hourly agency home aide rates quoted by phone and paid by client to Home Instead Senior Care ($27) and quoted by phone by Compass Care, LLC ($40). Home Instead quoted a daily rate for a sleep in aide of $350 and said that an aide can work four 24-hour days without incurring overtime. A day rate of $350 is still more than $270. The CPAs that I conferred with do not understand how substantial overtime would not be incurred by an aide working four days per week.
Hourly home aide rates provided by agency home aides. - The 2nd Department Rejects NYSDOL’s ”13 Hours Rule” for 24-Hour Shift (live-in) Workers, by Ford Harrison LLP, Employment Law Information Network, September 17, 2017.
- Tokhtamann v. Human Care, LLC, 3671, 151268/16, Appellate Division of the Supreme Court of New York, First Department, April 11, 2017.
https://scholar.google.com/scholar_case?case=5183143613739663763&q=Tokhtaman+v.+Human+Care,+LLC,.&hl=en&as_sdt=6,33&as_vis=1 - Fact Sheet #79B: Live in Domestic Service Workers Under the Fair Labor Standards Act, Who is a Domestic Worker?, U.S. Department of Labor, Wage & Hour Division, Oct. 2013.
https://www.dol.gov/whd/regs/compliance/whdfs79b.pdf - Liability and Penalties for Violations of Mandatory Workers’ Compensation Insurance Coverage Requirements, New York State Worker’s Compensation Board.
http://www.wcb.ny.gov/content/main/Employers/nonCompliancePenalties.jsp
Aaron D. Schindler is a Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS), 355 Lexington Ave, 9th Floor, New York, NY 10017,(212) 541-8800. Securities products/services and advisory services are offered through PAS, a registered broker/dealer and investment advisor. Financial Representative, The Guardian Life Insurance Company of America (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian. Wealth Advisory Group LLC is not an affiliate or subsidiary of PAS or Guardian. PAS is a member FINRA, SIPC. 2017-46052 Exp. 8/19