How to Hire an In-Home Caregiver for an Aging Parent (Costs, Taxes)

Hiring an in-home caregiver for an aging parent usually comes down to one early decision, agency or direct hire, and that single choice changes who handles vetting, taxes, and backup coverage. It is a stressful crossroads, and most families reach it without knowing what either path really costs or commits them to. This guide walks you through both routes plainly, including the household-employer tax rule that catches families completely off guard when they hire a caregiver on their own.

We'll cover the difference between home care and home health care, the two ways to hire and what each costs, who actually pays (from Medicare to Medicaid to the VA), what to check before you commit, how to plan for backup coverage, where to find help, and the household-employer taxes you need to know about.

Home Care and Home Health Care Are Not the Same

It helps to know which kind of help you actually need. Home care, also called personal care, sends an aide to help with everyday activities like bathing, dressing, grooming, toileting, eating, and moving around, and often light housekeeping, transportation, and errands.1 Home health care is different: per the National Institute on Aging, it is part-time, physician-ordered skilled care, such as in-home nursing or physical, occupational, or speech therapy, delivered by a medical professional.1 This guide is mostly about home care, the day-to-day help most families hire. The distinction is more than vocabulary: it also shapes who might pay, because the programs that cover skilled home health rarely cover everyday home care. More on that just below.

Two Ways to Hire an In-Home Caregiver: Agency or Independent

There are two main ways to bring paid help into the home, and the choice shapes everything from cost to who handles the paperwork.1

• Through a home care agency. The agency screens, hires, schedules, and pays its aides, and can typically send a substitute if your regular aide is unavailable.1 It costs more per hour, but the agency carries the burden of vetting, coverage, payroll, taxes, and insurance.
• Hiring an independent caregiver directly. This often costs less per hour, but it shifts screening, scheduling, backup coverage, payroll, and taxes onto the family.1

Here is how the two routes compare at a glance.1

Neither is automatically right. A family with time to manage logistics and a trusted candidate may do well hiring directly; a family that's stretched thin, or far away, often finds an agency's reliability worth the premium.

What an In-Home Caregiver Costs

Cost is usually the first question, and it helps to start from a real number rather than a vague "it depends." Nationally, the median cost of a non-medical home care aide is about $35 an hour in 2026, or roughly $80,080 a year at 44 hours of care a week, according to the CareScout 2025 Cost of Care Survey.2

That national median reflects agency pricing. Hiring an independent caregiver directly usually costs less per hour, because you are not paying an agency's overhead, but the lower rate comes with a trade: you take on the screening, scheduling, backup coverage, payroll, and taxes the agency would otherwise handle.1 Rates also vary widely from state to state and city to city, so treat $35 an hour as a national midpoint, not a quote for your own area.2

Who Pays for In-Home Care: Medicare, Medicaid, and the VA

Once you see the hourly math, the next question is usually the hardest one: how are we going to pay for this? Here is the part that surprises families most: the program most people assume will cover in-home care, Medicare, usually doesn't. Before you commit to paying privately, it's worth checking each of these, because a covered benefit you didn't know about can change the whole budget.

• Medicare covers home health only in narrow cases: your parent must be homebound, under a plan of care established and reviewed by a physician, and need intermittent skilled nursing or therapy from a Medicare-certified agency. For those covered services the patient generally pays $0. But Medicare does not pay for ongoing personal care (the everyday home care this guide is mostly about) when that is the only help needed.3
• Medicaid. Because Medicare leaves that gap, Medicaid and out-of-pocket spending are the largest payers of long-term care in the U.S.4 Many state Medicaid programs cover ongoing home care, and some will even pay a family member to provide it, which is exactly what the state-by-state section further down is about. If your parent may qualify financially, this is worth a hard look before you spend down savings.
• VA benefits. If your parent is a veteran, the U.S. Department of Veterans Affairs offers Homemaker and Home Health Aide services through its geriatric and extended-care programs for eligible enrolled veterans. A veteran pays no copay for the first 21 days of extended care in a 12-month period; after that, copays are based on the veteran's finances. Some long-term-care services aren't covered, and for those a veteran may pay through Medicaid, Medicare, or private insurance.5
• Out of pocket. For many families this is still the reality, at least at first, sometimes stretched with a long-term care insurance policy.

What to Check Before You Hire an In-Home Caregiver

Whichever route you choose, do not skip the vetting. NIA recommends that families:1

• Check references and confirm the aide's relevant experience and training.1
• Check for complaints filed against a company with the state and local agencies that regulate health services, and with the Better Business Bureau.1
• Get the full picture before signing, including the services, fees, terms, and any restrictions.1
• Put the tasks in writing, agreeing on what the aide will and won't do, and then supervise and check in on the care.1

A clear written understanding up front prevents most of the conflicts that otherwise surface a month in.

Planning for Backup Coverage

If you hire directly, there is one scenario worth planning for before it happens: your caregiver gets sick, has a family emergency, or gives notice. An agency can typically send a substitute when your regular aide is unavailable; a direct hire cannot, and that gap can land on your family on the hardest possible day.1

A little planning takes the panic out of it. Line up a vetted backup aide before you need one, even someone who only covers the occasional shift. Some families keep a part-time relationship with a home care agency alongside their direct hire, so there is a number to call when coverage falls through. And keep written notes on your parent's routine, medications, and preferences, so a fill-in can step in without you having to reconstruct everything from memory.

How to Find Help

• Call the Eldercare Locator at 1-800-677-1116, or visit eldercare.acl.gov, to reach your parent's Area Agency on Aging, which can point you to home care resources locally.6
• Ask the doctor or a hospital discharge planner for agency recommendations, especially after a hospitalization.
• If your parent has Medicaid or is a veteran, revisit the who-pays breakdown above, since a covered benefit can change the math before you pay privately. See our guides on respite care and VA benefits for veterans with dementia.

The Tax Part Nobody Mentions: The Household Employer Rules

This is the part that catches almost everyone off guard, and it is worth slowing down for, because getting it wrong can mean a surprise tax bill on top of everything else you are already carrying.

If you hire a caregiver directly rather than through an agency, and you control not just what work is done but how it is done, the Internal Revenue Service (IRS) generally treats that caregiver as your household employee, which makes you a household employer with real tax responsibilities, sometimes called the "nanny tax."1

Here is what that means for 2026:

• If you pay any one household employee cash wages of $3,000 or more in 2026, you generally must withhold and pay Social Security tax (6.2%) and Medicare tax (1.45%) on those wages.1
• If you pay total cash wages of $1,000 or more in any calendar quarter in the current or prior year, you also generally owe federal unemployment (FUTA) tax.1
• Becoming a household employer also brings year-end tax paperwork. IRS Publication 926, the Household Employer's Tax Guide, at irs.gov/publications/p926, walks through exactly what to register for and file.1

When you hire through an agency, the agency is usually the employer and handles these payroll taxes and insurance, which is a real part of what the higher hourly rate buys you.1

Federal rules are only part of the picture. States can add their own obligations on top, such as state unemployment insurance, workers' compensation, or domestic-worker wage laws. Your state labor department website is the place to confirm what applies in your state; the U.S. Department of Labor's Wage and Hour Division at dol.gov/agencies/whd is a good federal starting point for in-home worker wage rules, and for anything beyond the basics a tax professional is worth the call.

When In-Home Care Is No Longer Enough

In-home help works well for many families, often for a long time. But needs can outgrow what a part-time aide can safely manage, especially when a parent needs help around the clock, has advancing dementia, or requires more hands-on medical care than home health visits cover. If you are seeing more frequent falls, missed medications, or simply that one aide is not enough, it may be time to look at more supportive settings such as assisted living, memory care, or skilled nursing care.

That does not mean you failed at keeping your parent home; it means the situation changed. Our guide on the signs an aging parent needs more help can help you tell the difference between a rough patch and a real, lasting shift in need.

Free Resources Worth Saving

Common Questions

Learn More

Find personalized help arranging in-home care at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.