Hiring an in-home caregiver for an aging parent usually starts with one early decision: go through a home care agency, or hire someone yourself. Behind that choice sits a question few families think to ask, which is who the caregiver's employer is, because the answer decides who owes the payroll taxes. It is a stressful crossroads, and most families reach it without knowing what either path commits them to. This guide walks you through both routes plainly, including the household-employer tax rule that catches families off guard, even some who found their caregiver through an agency.

We'll cover the difference between home care and home health care, how an agency and a direct hire differ, what in-home care 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, is help with everyday activities, which the National Institute on Aging (NIA) calls "activities of daily living": bathing, dressing, grooming, using the toilet, eating, and moving around, such as getting out of bed and into a chair. Home care aides may also help with light housekeeping, transportation, and errands, but they do not provide skilled medical care, and aides are usually not medical professionals. Home health care is different: NIA describes it as typically part-time medical services ordered by a physician for a specific condition, which may include in-home nursing care to help a person recover from surgery, an accident, or an illness, and physical, occupational, or speech therapy. 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.

Home Care Agency vs. Independent Caregiver: Who Is the Employer?

You can bring paid help in through a home care agency or hire a caregiver yourself, and the difference that matters most is one families rarely ask about: who the caregiver works for. The IRS answers that with a control test, not with whether an agency was involved.

  • An agency that provides the worker and controls the work. If an agency provides the worker and controls what work is done and how it is done, the worker isn't your employee, according to IRS Publication 926.
  • A caregiver you control. If you can control not only what work is done but how it is done, the worker is your household employee. That holds whether the work is full time or part time, and even if you hired the worker through an agency or from a list an agency or association provided.

That second point is the one that trips families up. A referral service that hands you names, then leaves you to direct the caregiver day to day, does not make the agency the employer.

What changes Agency provides the worker and controls the work You control the work (hired yourself or from an agency's list)
Who the employer is The agency; the worker isn't your employee You, as a household employer
Federal payroll taxes ("nanny tax") Not yours, since the worker isn't your employee Yours once wages reach the 2026 thresholds below
State unemployment tax and workers' compensation Not your household-employer questions Pub. 926 tells you to check what your state requires
If required taxes go unpaid Not your liability Generally your liability, and interest and penalties may be charged

Neither route is automatically right. What matters is knowing which one you are on before the first shift, so ask any agency plainly: will you employ this caregiver and direct the work, or are you referring someone I will manage?

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 caregiver is about $35 an hour, or roughly $80,080 a year at 44 hours of care a week, according to the CareScout 2025 Cost of Care Survey, the most recent national data, released March 2, 2026.

Treat that as a national midpoint, not a quote for your own area: CareScout collects rates at the metropolitan-area level and warns that actual costs vary with individual care needs, provider availability, and local market conditions. And if you become a household employer, the hourly wage is not your whole cost, because you also pay an employer share of payroll taxes from your own funds, as the tax section below explains.

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. Read that exclusion carefully, because it turns on the word only, and that is the piece most families miss. While your parent is getting covered skilled care, the same home health benefit can also pay for a home health aide, and Medicare's own examples of what that aide does are help with walking, bathing or grooming, changing bed linens, and feeding, the very tasks you may be about to hire for. So if a nurse or therapist is already visiting, ask the agency about aide hours before you start paying for them. Two limits keep it honest: the hours are part-time or intermittent, generally under 8 hours a day and 28 or fewer hours a week counting the nursing, and aide services are covered only while your parent still needs the skilled care. When the nursing or therapy ends, the aide hours end with it, which is exactly the point at which private pay, Medicaid, or the VA has to pick up.
  • Medicaid. Because Medicare leaves that gap, Medicaid often matters most: it pays for the largest share of long-term care services, but to qualify, income must be below a certain level and your parent must meet minimum state eligibility requirements, which are based on how much help they need with daily activities. Long-term care that no public or private insurance program covers is paid for out of pocket. 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 lists Homemaker and Home Health Aide services among the long-term care services it offers veterans signed up for VA health care. Enrollment alone isn't enough: VA must conclude that your parent needs the specific service to help with ongoing treatment and personal care, and the service has to be available near them. Some veterans are exempt from VA's extended care copays, such as a veteran with a compensable service-connected disability. For others, there is no copay for the first 21 days of geriatric or extended care in a 12-month period; after that, VA bases the copay on the level of care and the financial information on VA Form 10-10EC, and a veteran owes it only to the extent the veteran and spouse have available resources. VA covers some long-term care services under standard health benefits, and for services it doesn't cover, a veteran may be able to pay through Medicaid, Medicare, or private insurance.
  • 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:

  • Check references before hiring a particular person or company. Ask providers for references from people who have used their services.
  • Check for complaints, if possible, filed against a company with the state and local agencies that regulate health services.
  • Get the full picture before signing, gathering as much information as you can about services, fees, terms, and restrictions before you sign an agreement for a care provider.
  • Ask for recommendations from your parent's doctor or another health care professional, family, or friends.

Before the first shift, it also helps to talk through exactly which tasks you are hiring for, so the caregiver and your family start with the same expectations.

Planning for Backup Coverage

If you are the one hiring and directing the caregiver, there is one scenario worth planning for before it happens: your caregiver gets sick, has a family emergency, or gives notice. Unless you have arranged otherwise, nobody else is lined up to cover the shift, and that gap can land on your family on the hardest possible day. If you go through an agency, ask before you sign how it handles a missed shift.

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. You might also ask a home care agency whether it can cover occasional shifts alongside your own 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.

Not sure whether an agency or a direct hire fits your family, or how to vet a caregiver? Chat with Brevy and we'll help you think it through.

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.
  • 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 control not just what work is done but how it is done, the Internal Revenue Service (IRS) treats the caregiver as your household employee, which makes you a household employer with real tax responsibilities, sometimes called the "nanny tax." That is true whether you found the caregiver yourself, through an agency, or from a list an agency or association gave you.

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 the employee's 7.65% share, Social Security tax (6.2%) plus Medicare tax (1.45%), and pay a matching 7.65% employer share from your own funds. That is 15.3% of cash wages in total, not 7.65%.
  • If you pay household employees total cash wages of $1,000 or more in any calendar quarter of 2025 or 2026, you also generally owe federal unemployment (FUTA) tax on the first $7,000 of cash wages you pay each household employee. The rate is 6%, and a credit of up to 5.4% for amounts you paid into state unemployment funds can bring it down to a net rate of 0.6%; the credit is limited if you pay your state contributions late, and is reduced for wages paid in a credit reduction state.
  • Both tests leave out wages you pay your own spouse or your own child under 21. Wages you pay your own parent are always left out of the FUTA test, and left out of the Social Security and Medicare test unless a narrow Pub. 926 exception applies. These family wages are still subject to federal income tax. The Social Security and Medicare test also leaves out an employee who is under 18 at any time during the year, unless household work is that employee's principal occupation.
  • 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.

If you're required to withhold and pay these taxes and don't, you will generally be liable for the employment taxes you should have withheld and paid, and interest and penalties may also be charged. An agency that provides the worker and controls what work is done and how it is done is the employer instead, and the worker isn't your employee; hiring through an agency, or from a list an agency supplies, doesn't change the answer when you still control how the work is done.

Federal rules are only part of the picture. Pub. 926 tells household employers to contact their state unemployment tax agency about state unemployment tax, and to determine whether they need to pay or collect other state employment taxes or carry workers' compensation insurance. 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

Eldercare Locator Free nationwide service of the Administration for Community Living that connects you to services in your parent's community, including the local Area Agency on Aging, in-home help, and transportation. 1-800-677-1116 eldercare.acl.gov
IRS Publication 926, Household Employer's Tax Guide The official rules on household-employee taxes: what to withhold, register for, and file. irs.gov/publications/p926
U.S. Department of Labor, Wage and Hour Division Federal wage rules for in-home workers, plus a pointer to the state requirements that apply on top. dol.gov/agencies/whd
National Institute on Aging, caregiving resources Clinically vetted guidance on hiring and managing in-home help for an aging parent. nia.nih.gov

Common Questions

Is it cheaper to hire a caregiver directly or through an agency?

Compare the full cost, not just the hourly rate. The national median for a non-medical caregiver was about $35 an hour in the most recent CareScout survey, and rates vary widely by area. If you hire someone yourself and control how the work is done, the wage isn't your whole cost: once you pay that household employee $3,000 or more in cash wages in 2026, you generally owe a matching 7.65% employer share of Social Security and Medicare tax, plus federal unemployment tax once you pay $1,000 or more in a calendar quarter.

Do I have to pay taxes if I hire a caregiver myself?

Possibly. If you control how the work is done, the caregiver is your household employee, even if you found them through an agency or an agency's list. If you pay one household employee cash wages of $3,000 or more in 2026, you generally must withhold their share of Social Security and Medicare taxes and pay a matching employer share, and if you pay $1,000 or more in any calendar quarter you also generally owe federal unemployment tax. Wages you pay your own spouse or your own child under 21 don't count toward either test; wages you pay your own parent never count toward the FUTA test and count toward the Social Security and Medicare test only under a narrow exception. Those wages are still subject to federal income tax. If an agency provides the worker and controls what work is done and how, the worker isn't your employee.

What should I ask before hiring an aide?

Check references before hiring a particular person or company, and if possible check for complaints filed against a company with the state and local agencies that regulate health services. Ask providers for references from people who have used their services, and gather as much information as you can about services, fees, terms, and restrictions before you sign an agreement. It is also worth asking an agency directly whether it will employ the caregiver and control the work, or is referring someone you will manage, because that decides who the employer is.

What's the difference between home care and home health care?

Home care, or personal care, is help with everyday activities like bathing, dressing, grooming, using the toilet, eating, and moving around. Aides may also help with light housekeeping, transportation, and errands. Home health care is typically part-time medical services ordered by a physician for a specific condition, such as in-home nursing care or physical, occupational, or speech therapy.

Does Medicare pay for in-home care?

Mostly no. Medicare covers short-term skilled home health (intermittent nursing or therapy) only when your parent is homebound and under a physician's plan of care from a Medicare-certified agency, and it pays $0 for those covered services. It does not pay for ongoing personal care, the everyday home care most families hire, when that is the only care your parent needs. While covered skilled care is in place, though, the same benefit can also pay for a home health aide, and Medicare's examples of that aide's work are help with walking, bathing or grooming, changing bed linens, and feeding. Those aide hours are part-time and they end when the skilled service ends, so ask the home health agency about them while the nurse or therapist is still visiting. For that day-to-day help, Medicaid pays the largest share of long-term care services for people who meet its income and state eligibility requirements, and care no program covers is paid out of pocket. The VA offers geriatric and extended-care services to veterans signed up for VA health care when VA has concluded they need a specific service and it is available near them.

Getting Paid to Care for a Family Member, by State

If you are also wondering whether a state program could pay you to care for your parent yourself, start with your state's guide below. Whether you can be paid, and how much, depends on your state's Medicaid and program rules.

AlabamaView guide AlaskaView guide ArizonaView guide ArkansasView guide ColoradoView guide ConnecticutView guide DelawareView guide District of ColumbiaView guide FloridaView guide GeorgiaView guide HawaiiView guide IdahoView guide IllinoisView guide IndianaView guide IowaView guide KansasView guide KentuckyView guide LouisianaView guide MaineView guide MassachusettsView guide MichiganView guide MinnesotaView guide MississippiView guide MissouriView guide MontanaView guide NebraskaView guide NevadaView guide New HampshireView guide New JerseyView guide New MexicoView guide New YorkView guide North CarolinaView guide North DakotaView guide OhioView guide OklahomaView guide OregonView guide PennsylvaniaView guide Rhode IslandView guide South CarolinaView guide South DakotaView guide TennesseeView guide TexasView guide UtahView guide VermontView guide VirginiaView guide WashingtonView guide West VirginiaView guide WisconsinView guide WyomingView guide
49 states

Learn More

Care TypesWhat Are Personal Care Services? A Family's Guide to Non-Medical In-Home CarePersonal care services are non-medical help with daily tasks like bathing and dressing. See what aides do, how it differs from home health, and who pays. CaregiverRespite Care: Types, Funding, and How to Find It (50-State Directory)What respite care is and how to pay for it in 2026: the main types, NFCSP respite with no income test, Medicaid and VA respite, and every state guide. CaregiverLong-Distance Caregiving: How to Help an Aging Parent From Far AwayHow to care for an aging parent from a distance: what you can do from afar, the family meeting to have first, staying connected, and finding local help. CaregiverThe National Family Caregiver Support Program: Free Help You've Already Paid ForWhat the National Family Caregiver Support Program funds, who is eligible, and how to reach respite and caregiver support through your Area Agency on Aging. CaregiverCaregiver Burnout: Signs, Causes, and Where to Get HelpHow to recognize caregiver burnout, why it happens, and what actually helps, from respite care to evidence-based programs like REACH II and Powerful Tools. CaregiverGeriatric Care Managers: What They Do, What They Cost, and How to Find OneWhat a geriatric care manager (aging life care professional) does, why they're private-pay, when one is worth it, and how to find a trustworthy one. CaregiverPaid Family Leave for Caregivers: How State Programs Can Replace Part of Your PayFMLA can protect your job but doesn't pay you. How state paid family leave may replace part of your pay while caring for a parent, and how to check your state. CaregiverPersonal Care Agreements: How to Pay a Family Caregiver Without a Medicaid PenaltyA personal care agreement lets a family pay a relative for caregiving without the money counting as a gift under Medicaid's look-back. What to include and why. CaregiverHospital Discharge Planning: A Family Caregiver GuideFacing a parent's hospital discharge? Learn what discharge planning is, your rights as a family caregiver, and how to appeal a discharge that feels too soon.

Bringing help into the home is a big step, and you don't have to sort it out alone. If you want help comparing agencies and direct hires, or understanding what's covered for your family, start with Brevy. We'll stay with you for as long as it takes.

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.

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Expert eldercare guidance from Brevy's team of healthcare professionals and researchers.