Agency Care vs. Hiring a Private Caregiver Directly

What the agency’s markup actually pays for

• A DOJ Live Scan background check and ongoing supervision of the caregiver.
• Workers’ compensation coverage if the caregiver is hurt in your home.
• Liability insurance and bonding against theft.
• Payroll taxes, so you aren’t the one filing them.
• A backup caregiver when the regular one is sick or quits.

The part families miss: becoming a household employer

If you hire a caregiver directly and control their schedule and duties, the IRS generally considers you their household employer — calling them an “independent contractor” on paper doesn’t change that. As the employer, you’re responsible for withholding and paying Social Security and Medicare taxes (via Schedule H), and in California, carrying workers’ compensation insurance — if the caregiver is injured at work and you don’t have it, you can be personally liable for their medical costs and lost wages. Misclassifying a household caregiver as a 1099 contractor is one of the most common and most costly mistakes families make.

When hiring directly can still make sense

It can work for families with the time and stomach to manage payroll, screening, and backup coverage themselves — often through a payroll service built for household employers rather than doing it by hand. It rarely makes sense for a family juggling a full-time job, a first-time caregiving situation, or coverage that can’t have gaps.

A quick way to compare the real cost

Add up the private caregiver’s hourly rate plus your share of payroll taxes, workers’ comp insurance, and the cost of your own time spent screening, scheduling, and covering call-outs. Compare that total — not just the sticker rate — against a licensed agency’s all-in hourly rate before deciding.