Fong Law Group

The Powers and Responsibilities of Representative Payees

Do you have a friend or loved one who receives Social Security and is unable to manage her payments? If so, you can request that the Social Security Administration (SSA), the government agency that disburses Social Security, name you as the representative payee for that person.

Being a representative payee gives you the power and the responsibility to manage that money for your friend or loved one. (The Office of Personnel Management and the Railroad Retirement Agency also appoint representative payees, and the responsibilities are basically the same.)

As a representative payee, you only have the power to handle the Social Security benefit for your friend or loved one (the beneficiary) and not any other money or property for that person unless some other document or government agency appoints you to do so. 

It is important to remember that the check from the SSA is not yours; it belongs to the beneficiary. The beneficiary is supposed to get the benefit of the money. Your role includes performing four very important duties:

1. You must act only in the beneficiary’s best interest, which means the beneficiary’s money belongs only to them. You cannot pay yourself for managing their money, and you cannot borrow it or lend it to anyone else; those would be conflicts of interest, which you must avoid. You should also do your best to make sure the beneficiary does not get scammed or mistreated.
    
2. You must manage the beneficiary’s Social Security check carefully, which means you should make sure the beneficiary’s daily needs and any other foreseeable needs are met, bills are paid on time, and all taxes are paid.
    
3. You must keep the money from the Social Security check separate from your own money, which means you cannot keep the money in any kind of joint account or sign any contracts or leases for the beneficiary. If you have to open an account or sign anything for the beneficiary, sign “(beneficiary's name) by (your name), representative payee” so everyone knows you are acting on the beneficiary’s behalf.
    
4. You must keep good records of everything you do with the beneficiary’s money, which means keeping track of all money you spend for the beneficiary and keeping all receipts. Representative payees also have to file annual reports unless they are exempt. The following types of payees are now exempt from the annual accounting requirements: 

• Natural or adoptive parents or legal guardians of a minor child beneficiary who primarily reside in the same household as the child
• Natural or adoptive parents of a disabled adult beneficiary who primarily reside in the same household with the beneficiary
• Spouse of a beneficiary

Remember, there may be other people appointed to help the same beneficiary with other things. They have the same general four duties as you, and all of you must work together if that is in the beneficiary's best interest.

If you are not a family member and the beneficiary has family, you must keep family members informed about what you are doing for the beneficiary. This will reduce the chance that they will have problems with your actions. In the end, however, the decisions about the Social Security check are yours to make because you are responsible. You are the one who will get in trouble if something goes wrong. For example, if someone thinks you violated one of your four important duties, they can report you to the SSA. The SSA will investigate, and if it decides that you misused the beneficiary's money, it will make you replace what was lost out of your own pocket.

The SSA has created a Representative Payee Portal as a central gateway for individual representative payees with a my Social Security account to conduct their own business or manage direct deposit, wage reporting, and annual reporting for their beneficiaries.

If you have more questions about what it means to be a representative payee, check out www.ssa.gov/payee.

For more information, visit the SSA’s online guide for representative payees. 

Some Social Security Beneficiaries Can Get Retroactive Payments -- But at a Cost

If you need a lot of cash on hand upon retirement, Social Security offers a lump-sum payment option that’s worth six months of benefits. However, it comes at a cost. It is important to understand the details before agreeing to the payment.

If you have waited beyond your full retirement age (66 for those born between 1943 and 1954) to begin collecting Social Security benefits, you have the option of asking for back payments. The maximum that Social Security offers is six months’ worth of retroactive payments in a lump sum. The downside is that by taking the lump sum, your retirement date and the amount of your monthly benefit are rolled back six months. 

When you delay taking retirement beyond your full retirement age, you amass “delayed retirement credits” that increase your benefits by 8 percent for every year that you wait, over and above annual inflation adjustments. By taking the lump-sum payment, you lose the delayed credits that you had accumulated over the previous six months, so your monthly benefit will be lower than if you did not take the lump sum -- forever.  So, for example, if by taking the six months of retroactive benefits your regular monthly benefit is reduced by $150 and you live another 25 years, you're foregoing $45,000 over that span.  

Whether you should take the lump sum payment depends on a number of factors, including your life expectancy, your spouse’s needs, and what you will do with the new money. Taking the lump-sum payment makes more sense if your life expectancy is shorter. In this case, the immediate cash infusion will be more beneficial than bigger monthly payments. However, if you are married and are the higher earner, you will want to consider your spouse’s needs. If you die, your spouse will receive spousal benefits equal to the monthly amount of your benefits. The higher your benefit, the more your spouse will receive. 

You also need to consider what you will do with the lump-sum payment. If you are paying off high-interest debt or investing in something with a good rate of return, the lump sum might be better than having the higher monthly payment.

Medicare Enrollment Period Extended for Those Who’ve Been Getting a Busy Signal

Medicare is part of the Social Security Administration (SSA), so if you need to enroll in Medicare, that’s whom you contact. But in recent months, phone lines at the SSA were experiencing major technical issues, preventing some individuals from being able to reach the SSA via telephone in a timely manner. These issues affected the SSA’s national 800 number as well as its field office general inquiry phone lines. At the same time, because of the pandemic, SSA offices had not been permitting in-person appointments until early April.

Certain beneficiaries — particularly those without Internet access — were therefore unable to reach the SSA before the end of Medicare’s annual general enrollment period, which typically closes March 31.

As a result, the Centers for Medicare and Medicaid Services (CMS) has announced it will provide what is known as equitable relief to anyone who, due to these challenges, was unable to submit their Medicare enrollment or disenrollment requests after January 1, 2022. These individuals will now have extra time — through Friday, December 30, 2022 — to submit Medicare Part A or Part B enrollment or disenrollment requests without penalty. This relief from penalties also applies to the 2022 Initial Enrollment Period and Special Enrollment Periods.

Individuals who were eligible to be on Medicare and incurred medical care costs during this time period can request retroactive Medicare coverage going back to January 1, 2022. Note, however, that premiums must be paid as a lump sum or else can be deducted from any Social Security benefits the individual currently receives.

Contact the SSA’s national 800 number at 1-800-772-1213 for more information, or find an SSA office near you via the SSA’s online office locator.

What to Do If Your Medicaid Application Is Denied

If you apply for long-term care assistance through Medicaid and your application is denied, the situation may seem hopeless. The good news is that you can appeal the decision. 

Medicaid is a program for low-income individuals, so it has strict income and asset eligibility requirements. Qualifying for Medicaid requires navigating the complicated application process, which has many potential stumbling blocks. However, a Medicaid denial does not mean you will not eventually qualify for benefits. 

The Medicaid agency may deny a Medicaid application for a number of reasons, including the following: 

• Missing documentation. You need to show proof that you are eligible for benefits, which usually means providing Social Security statements, bank records, property deeds, retirement accounts, and insurance records, among other things. 
• Excess assets. In order to be eligible for Medicaid benefits a nursing home resident may have no more than $2,000 in "countable" assets (in most states). 
• Transferred assets. If you transferred assets for less than market value within five years before applying for benefits, you may be subject to a penalty period before you become eligible for benefits. 

The Medicaid agency is required to issue the denial notice with 45 days of the application (or 90 days if you filed for benefits on the basis of a disability). When you get a denial notice, read it carefully. The notice will explain why the application was denied and specify how to file an appeal. 

Before filing a formal appeal, you can try informally asking the agency to reverse the decision. If you made a mistake on the application, this is the easiest and quickest way to proceed. If the caseworker made a mistake, it may be more complicated and require escalation to a supervisor or a formal appeal. 

Appealing a Decision
The denial notice will tell how long you have to file an appeal—the deadline may be as short as 30 days or as long as 90 days after the denial notice. It is important to file the appeal before the deadline. Whether the denial notice requires it or not, you should submit your request for an appeal in writing, so that there is a record of it.

Once your appeal is submitted, the Medicaid agency will set a hearing date. Applicants must attend the hearing or their cases will be dismissed. You have a right to have witnesses testify at the hearing and to question the Medicaid agency’s witnesses. It is a good idea to have an attorney to help you through the appeal process. An attorney can make sure you have all the correct documentation and information to present at the hearing. 

If you win the appeal, your benefits will be retroactive to the date of your eligibility—usually the date of your application. If you lose the appeal, the notice will explain how to appeal the decision. The next step in the appeal process usually involves submitting written arguments. If the next appeal is unsuccessful, then you will have to appeal to court. It is crucial to have the assistance of an attorney for this. 

Reapplying for Benefits
If your application was denied correctly due to excess assets or income, there are steps you can take to spend down your assets or put your income in a trust. Contact an attorney to find out what actions you can take to qualify for benefits. Once you do this, you can then reapply for benefits. Note that when you reapply for benefits, your eligibility date will change to the date of the new application. 

Claiming Social Security Benefits at Age 70

If you are about to turn 70, congratulations on reaching a big milestone.  And if you also have delayed claiming Social Security retirement benefits up till now, you are joining a select group -- only 6.5 percent of Social Security recipients put off collecting their benefits until they reach three score and ten, the age at which they can collect the maximum benefit. If you are about to join this elite group of septuagenarian claimers, it’s important to know when and how to claim.

The decision of how long to wait to claim Social Security benefits depends on a number of factors, including other income sources in retirement and projected longevity.  But Social Security experts advise waiting as long as possible to start collecting benefits, up to age 70.  This is because if you delay taking retirement beyond your full retirement age (66 for those born from 1943 to 1954), you amass “delayed retirement credits” that increase your benefit by 8 percent for every year that you wait, over and above annual inflation adjustments.  Your checks will be about 76 percent more than had you claimed at age 62, the earliest you can file. It’s tough to find a better and more reliable investment than that. (However, keep in mind that if you are collecting benefits based on the work record of a current or ex-spouse, there is no point in waiting until 70 -- you won't accrue delayed retirement credits beyond your full retirement age.)

Don’t Wait Any Longer

Delayed retirement credits stop at age 70, so there is no advantage to putting off starting benefits any longer.  Not only won’t your credits increase by claiming after age 70, but if you wait longer than half a year, you’ll start losing monthly benefits you would have otherwise received.  The Social Security Administration (SSA) will pay you retroactively for benefits accrued up to six months after your 70th birthday, but that’s it.  If you wait any longer, benefits you would have received are permanently forfeited.

The next thing to know is that the SSA won’t automatically start sending you checks once you turn 70. You need to apply for benefits. You can do this starting four months before the date that you want your benefits to begin.  To get the maximum amount, you’ll want the benefits to start the month you turn 70.  There is, however, one scenario where benefits will automatically kick in at 70: those who took benefits after reaching their full retirement age and then suspended their benefits to earn delayed credits until age 70.  For them, the SSA should automatically restart benefits at 70.

You can apply online -- click here.  If you can’t submit your application online, you can call 1-800-772-1213 (TTY 1-800-325-0778). In normal times, another alternative is to visit your local Social Security office, but during the pandemic visits are by appointment only and only for a limited number of reasons. However, SSA offices should be reopening soon; check the SSA’s Coronavirus Disease page for updates. The SSA will want certain information and documents when you apply. For a checklist of what may be required, click here.

When will you get your first check?  The SSA issues checks a month behind, so your benefits should start arriving the month after the month you turned 70.  For example, if you were born July 17, you should ask that your benefits start in July and your first check will come in August.  However, those born on the first day of the month get a small bonus: the SSA treats them as if they were born the previous month and starts paying benefits in their birth month.  So, for example, if you were born July 1, you’d request benefits to start in June and the payments would begin in July.

What If You’re Still Working?

Working past age 70 (or any time past your full retirement age, in fact) won’t affect your benefits.  And while you won’t increase your monthly benefit by waiting past age 70 to claim, you could boost it by working in addition to collecting Social Security. This is because the SSA recalculates your benefits each December based on your 35 highest-earning years of work. If your earnings plus your Social Security benefits allow you to replace a lower-earning year, your overall benefit could increase in the annual calculation. But Social Security benefits are taxable, so if you’re earning more money your tax rate may be higher.

In most cases, your Medicare premiums will be deducted from your Social Security check. If you happen to be retiring at age 70 and you’ve been paying Medicare’s high-earner surcharges, keep in mind that you can reverse these surcharges if your income drops far enough. The Social Security Administration uses income reported two years ago to determine a beneficiary's premiums. If your income decreases significantly due to certain circumstances, including retirement, you can request that the SSA recalculate your benefits and your premium surcharges could be eliminated or reduced. 

For an article in The New York Times on determining the optimal time to claim Social Security benefits and ways to maximize benefits, click here.

For the SSA's Retirement Benefits page, click here.

When a Social Security Recipient Dies, Survivors May Be Eligible for Benefits

When loved ones pass away, there are lots of considerations, including what happens to their Social Security. The decedent’s payments need to be stopped, but survivor’s benefits may be available to the spouse or, in certain cases, children. 

Social Security benefits stop at death. If a loved one who was receiving Social Security dies, you need to notify the Social Security Administration as soon as possible. Often the funeral home does this as one of its services, but if not, you can notify Social Security by calling 1-800-772-1213 or contacting your local Social Security office. Benefits are not paid for the month the recipient dies and are not prorated. So, even if the recipient dies in the middle or end of the month, Social Security will not pay any benefits for that month. If the Social Security Administration is not notified on time and makes a payment, that payment will have to be returned. 

Death Benefit
Regardless of age or eligibility for survivor’s benefits, surviving spouses are entitled to a one-time lump-sum payment of $255 if they were living with the decedent or collecting benefits on the decedent’s record. If there is no surviving spouse, the payment can be made to a child who qualifies for benefits on the decedent’s record. 

Survivor’s Benefits
In addition to the lump-sum death benefit, certain family members may be eligible to receive monthly survivor’s benefits, including the following:

• A widow or widower age 60 or older (age 50 or older if they have a disability).
• A surviving divorced spouse, under certain circumstances.
• A widow or widower at any age who is caring for the deceased’s child who is under age 16 or has a disability and is receiving child’s benefits.
• An unmarried child of the deceased who is younger than age 18 (or up to age 19 if they are a full-time student in an elementary or secondary school) or age 18 or older with a disability that began before age 22.
• Parents, age 62 or older, who were dependent on the deceased for at least half of their support.

If the spouse has reached full retirement age when the decedent died, then the spouse begins receiving the decedent’s actual benefits. This is true even if the decedent and spouse were divorced, so long as they had been married for at least 10 years. 

While a spouse can claim survivor's benefits as early as age 60, the benefits will be permanently reduced. If the surviving spouse claims benefits between age 60 and full retirement age, he or she receives a reduced percentage of the decedent’s benefits. At age 60, the spouse will receive 71.5 percent of the actual benefits. If the spouse waits to collect, this percentage increases each year until the spouse reaches full retirement age, at which point he or she can receive 100 percent of the actual benefits. A surviving spouse who is age 50 to 59 also receives 71.5 percent of the actual benefits. Spouses caring for a child and the decedent’s dependents receive 75 percent of the decedent’s actual benefit. Dependent parents receive 75 percent each or 82.5 percent if there is only one parent.

If a surviving spouse, including a divorced spouse, remarries before turning age 60, then the spouse is no longer eligible for benefits unless the new marriage ends. Spouses who remarry after age 60 are still eligible for survivor’s benefits. 

For more information about Social Security survivor’s benefits, click here.

Things to Remember at Tax Time

Tax day, which is Tuesday, April 19 in 2022, is approaching and it is time to begin crossing T's and dotting I's in preparation for paying taxes. As tax time draws near, you want to make sure you file all the proper forms and take all deductions you're entitled to.

Following are some things to keep in mind as you prepare your tax form.

• Gifts. Did you give away any money this year? The gift tax can be very confusing. If you gave away more than $15,000 in 2021, you will have to file a Form 709, the gift tax return. This does not necessarily mean you will owe taxes on the money, however. 
• Medical Expenses. Many types of medical expenses are tax deductible, from hospital stays to hearing aids. To claim the deduction, your medical expenses have to be more than 7.5 percent of your adjusted gross income. This includes all out-of-pocket costs for prescriptions (including deductibles and co-pays) and Medicare Part B and Part C and Part D premiums. (Medicare Part B premiums are usually deducted out of your Social Security benefits, so be sure to check your 1099 for the amount.) You can only deduct medical expenses you paid during the year, regardless of when the services were provided, and medical expenses are not deductible if they are reimbursable by insurance.  
• Parental Deduction. If you are caring for your mother or father, you may be able to claim your parent as a dependent on your income taxes. This would allow you to claim the $500 tax credit for any non-child depedents. 
• Long-Term Care Insurance Premiums. Premiums for "qualified" long-term care policies are treated as an unreimbursed medical expense. Long-term care insurance premiums are deductible for the taxpayer, his or her spouse and other dependents. 
• Social Security Benefits. Although Social Security benefits are generally not taxable, people with substantial income in addition to their Social Security may pay taxes on their benefits. If you file a federal tax return as an individual and your "combined income," including one half of your Social Security benefits and nontaxable interest income is between $25,000 and $34,000, 50 percent of your Social Security benefits will be considered taxable. If your combined income is above $34,000, 85 percent of your Social Security benefits is subject to income tax. 
• Home Sale Exclusion. Married couples can exclude from income up to $500,000 in profit on the sale of a home ($250,000 for single individuals). If a surviving spouse sells the home, he or she can still claim the exclusion as long as the house was sold no more than two years after the spouse's death. 
• Elderly or Disabled Tax Credit. Some low-income elderly or disabled individuals are entitled to a special tax credit. To be eligible, you must meet income limits. For more information, click here.
• Earned Income Tax Credit. Previously primarily available to people with young children, for 2021 working seniors without dependents may qualify for this important credit.  For more, click here.  
• Tax Refunds. Getting a federal tax refund should not affect your Medicaid or Social Security benefits. For a year after recieving a tax refund from the federal government, the refund will not be considered income or resources for SSI or Medicaid purposes. You can also transfer the refund within a year without incurring a penalty. 

The IRS's Tax Counseling for the Elderly (TCE) Program offers free tax help to taxpayers who are 60 and older. For more information, click here. The IRS also publishes a Tax Guide For Seniors.

Closing of Social Security Field Offices Disrupted SSI Benefits for Thousands, Lawsuit Charges

Plaintiffs in a class-action lawsuit against the Social Security Administration (SSA) might describe it as an open-and-shut case. When the SSA closed its field offices at the onset of the COVID-19 pandemic, it remained open for the purposes of denying benefits. But, plaintiffs say, the agency was effectively shut for low-income elderly adults and people with disabilities who needed to validate claims, or who sought to challenge the agency’s denial of their claims. The result: thousands of beneficiaries whose benefits were wrongfully reduced or discontinued, according to the suit.

Supplemental Security Income (SSI) is the basic federal safety net program for the elderly, blind and disabled, providing them with a minimum guaranteed income. As of September 2021, some 2.3 million people aged 65 or older were receiving SSI payments.

SSI recipients are required to demonstrate that they meet income and resource limits each month in order to qualify for assistance, and they must promptly report any changes in their financial circumstances that might affect their status. Failure to perform this routine, which traditionally many have done in person at local field offices, can result in the denial of benefits and a demand for repayment of benefits already sent.

While the SSA made provisions for people to report their information by phone, fax or mail after closing its offices in March 2020, this was easier said than done for the elderly and people with disabilities, according to the lawsuit, filed in U.S. District Court, Eastern District of New York, by the advocacy group Justice in Aging and others on behalf of a group of SSI recipients whose benefits were unlawfully reduced or terminated.

“These recipients—who are disabled, elderly, or both—are at high risk for serious consequences from COVID-19, which limits their ability to venture into their communities to secure needed documentation, go to the post office or to send faxes to SSA,” the lawsuit reads. Furthermore, even when recipients did file their information on time, often the SSA failed to process it for months, only to rule later that the beneficiaries had been overpaid and would have their future benefits docked.

Even a no-fault waiver of overpayment debts that the SSA issued in August 2020 did not mitigate the issue, because it was too limited, the lawsuit argues. For instance, to qualify for the waiver, the overpayment had to have occurred before September 30, 2020, and must have been brought to the SSA’s notice by the end of that year. Many people weren’t informed about the waiver, the lawsuit claims, and therefore could not apply for it.

Nearly 300,000 people have stopped receiving SSI since the closure of the offices, during a pandemic that has hit the elderly and those with disabilities particularly hard, the lawsuit notes. “Adults 65 and older have been the most at risk of death from COVID-19 and have constituted almost 80 percent of COVID-19 deaths. In addition, the risk of death from COVID-19 for persons with disabilities has been three times that of the general population.”

The plaintiffs, who are also represented by New York Legal Assistance Group and law firm Arnold & Porter Kaye Scholer LLP, have demanded a jury trial.

For Justice in Aging’s press release on the litigation, click here.

Medicare Premiums to Increase Dramatically in 2022

Medicare premiums are rising sharply next year, cutting into the large Social Security cost-of-living increase. The basic monthly premium will jump 15.5 percent, or $21.60, from $148.50 to $170.10 a month.

The Centers for Medicare and Medicaid Services (CMS) announced the premium and other Medicare cost increases on November 12, 2021. The steep hike is attributed to increasing health care costs and uncertainty over Medicare’s outlay for an expensive new drug that was recently approved to treat Alzheimer’s disease. Because most recipients have their Medicare premium deducted from their Social Security check, the upswing in Medicare premiums means that the Social Security cost-of-living increase of 5.9 percent, which was the largest in 39 years, will be smaller for most people. 

While the majority of beneficiaries will pay the added amount, a "hold harmless" rule prevents Medicare recipients' premiums from increasing more than Social Security benefits. This “hold harmless” provision does not apply to Medicare beneficiaries who are enrolled in Medicare but not yet receiving Social Security, new Medicare beneficiaries, seniors earning more than $91,000 a year, and "dual eligibles" who get both Medicare and Medicaid benefits.

Meanwhile, the Part B deductible will rise $30, from $203 to $233 in 2022, while the Part A deductible will go up by $72, to $1,556. For beneficiaries receiving skilled care in a nursing home, Medicare's coinsurance for days 21-100 will increase from $185.50 to $194.50. Medicare coverage ends after day 100.   

Here are all the new Medicare payment figures:

• Part B premium: $170.10 (was $148.50)
• Part B deductible: $233 (was $203)
• Part A deductible: $1,556 (was $1,484)
• Co-payment for hospital stay days 61-90: $389/day (was $371)
• Co-payment for hospital stay days 91 and beyond: $778/day (was $742)
• Skilled nursing facility co-payment, days 21-100: $194.50/day (was $185.50)

Your "Medigap" policy may cover some of these costs. 

Premiums for higher-income beneficiaries ($91,000 and above) are as follows: 

• Individuals with annual incomes between $91,000 and $114,000 and married couples with annual incomes between $182,000 and $228,000 will pay a monthly premium of $238.10.
• Individuals with annual incomes between $114,000 and $142,000 and married couples with annual incomes between $228,000 and $2846,000 will pay a monthly premium of $340.20.
• Individuals with annual incomes between $142,000 and $170,000 and married couples with annual incomes between $284,000 and $340,000 will pay a monthly premium of $442.30.
• Individuals with annual incomes above $170,000 and less than $500,000 and married couples with annual incomes above $340,000 and less than $750,000 will pay a monthly premium of $544.30.
• Individuals with annual incomes above $500,000 and married couples with annual incomes above $750,000 will pay a monthly premium of $578.30.

Rates differ for beneficiaries who are married but file a separate tax return from their spouse. Those with incomes greater than $91,000 and less than $409,000 will pay a monthly premium of $544.30. Those with incomes greater than $409,000 will pay a monthly premium of $578.30.

The Social Security Administration uses the income reported two years ago to determine a Part B beneficiary's premium. This means that the income reported on a beneficiary's 2020 tax return is used to determine whether the beneficiary must pay a higher monthly Part B premium in 2022. Income is calculated by taking a beneficiary's adjusted gross income and adding back in some normally excluded income, such as tax-exempt interest, U.S. savings bond interest used to pay tuition, and certain income from foreign sources. This is called modified adjusted gross income (MAGI). If your MAGI decreased significantly in the past two years, you may request that information from more recent years be used to calculate the premium. You can also request to reverse a surcharge if your income changes.

Those who enroll in Medicare Advantage plans may have different cost-sharing arrangements. CMS estimates that the Medicare Advantage average monthly premium will be lower in 2022, from an average of $21 in 2021 to $19 in 2022.

For Medicare’s press release announcing the new premium, co-payment and deductible amounts for 2022, click here.

Hiring a Caregiver: Should You Employ One Yourself or Go Through an Agency?

Most seniors prefer to stay at home as long as possible rather than move into a nursing home. For many families, this means eventually hiring a caregiver to look after an aging relative. There are two main ways to hire someone: directly or through a home health agency.

Hiring directly
When you hire a caregiver directly, you need to consider all the tax and liability issues. As an employer, you are responsible for filing payroll taxes, tax forms, and verifying that the employee can legally work in the United States. If you pay $2,300 or more in wages in 2021 to any one employee, you need to withhold and pay Social Security and Medicare taxes. If you pay more than $1,500 in wages in 2021, you need to pay unemployment taxes. In addition, a private caregiver may not carry his or her own liability insurance or workers' compensation. If an accident occurs on the job, you could be responsible.

The benefit of hiring a caregiver directly is that you have more control over whom you hire and can choose someone whom you feel is right for your family. Another benefit is that hiring privately is usually cheaper than hiring through a home health agency. For more information from Caring.com on hiring a caregiver directly, click here.

The agency route
When you hire through a home health agency, the agency is the employer, so you don't need to worry about tax and liability issues. The agency takes care of screening the employees, doing background checks, and providing insurance. In addition, a licensed home care agency must provide ongoing supervision to its employees. It can help the employees deal with difficult family situations or changing needs. The agency may also be able to provide back-up if a regular caregiver is not available.

The downside of going through an agency is not having as much input into the selection of the caregiver. Another consideration is that caregivers may change or alternate, causing a disruption in care and confusion. To find a home health care agency near you, click here.