How to Prosper as a Private Hire Caregiver or Independent Contractor

9 Steps to become a successful, independently working CNA or HHA

By Clare Absher RN, BSN  

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I was employed as an independent contractor for several years and discovered that I liked working on my own. Despite having to give up some agency benefits, being an independent contractor introduced many desirable job opportunities. The pay was good and I enjoyed the flexibility of making my own schedule and choosing my own clients.

Although I took delight in the freedom of being my own boss, I discovered there was a lot more to being an independent contractor than just hiring myself out. First and foremost, the serious tax responsibilities and liabilities are a big deterrent to working as an independent contractor. Quarterly estimated self-employment taxes (Medicare and Social Security) must be paid to avoid huge penalties owed at the end of the year. Looking back, I realize that perhaps being my own boss was not all it was cracked up to be.

Step 1: Decide between working as a private hire caregiver or an independent contractor.

"What's the difference?"

Most CNAs and HHAs, with few exceptions, do not work as independent contractors. Rather, these highly qualified individuals are privately employed by the client (or family) that hires them to provide care. Only on rare occasions will you find CNAs or HHAs that truly work as independent contractors. Although it is appealing to be completely "independent" as a self-employed contractor, I would caution even the most seasoned professional to think twice about taking this course of employment. Some of the drawbacks to consider are:

Alternately, when accepting a job as a "private hire" CNA or HHA, you are employed directly by the client or their family. They are your employer and will be responsible for payroll, taxes, and insurances on your behalf. You are able to focus on caregiving and not the day-to-day clerical duties.

Step 2: Verify that you have the appropriate training and certifications to work independently.

CNAs and HHAs have specific training requirements in each state. Federal regulations require that all nurse aides have a minimum of 75 hours of training, of which 16 hours must be in a supervised clinical setting. Training must be performed by a Registered Nurse with at least 2 years of experience. However, more than half the states have training requirements that exceed the 75-hour minimum; some states even require up to 120 hours of training. Federal regulations also require both CNAs and HHAs have 12 hours of continuing education per 12 month period to maintain their certification. If you have already met the CNA or HHA training requirements you can verify your certification on your state nurse aid registry. If you are not yet sufficiently trained or certified, you can refer to your state registry for details on training and requirements.

Additionally, you can expect that all fifty states will require a clean record, free of criminal convictions. Some may forgive minor violations after 7 years or more, but not all. States will also expect that you do not have any mental or physical conditions that would hinder your job performance.

Step 3: Consult with your accountant or an IRS representative that will offer free advice.

As noted above, be cautious when it comes to becoming an independent contractor. Here lies the main distinction between an independent contractor and a privately hired caregiver employee. When working as an independent contractor it is important that you understand you are considered self-employed. This means that you must pay self-employment tax (SE tax) which includes your Social Security and Medicare tax. Refer to Self-Employed Individual Tax Center to learn more and answer your tax questions.

On the contrary, you do not have to pay self-employment taxes when hired privately by a family because you are a household employee. The client or family, as your employer, is responsible for taxes and withholdings along with a variety of other clerical matters. Families who are compliant with tax laws will expect to be responsible for these matters; make certain to make the distinction prior to hiring if you are an independent contractor or household employee so there are no surprises come the first pay check (and tax time). In most cases it will be a huge tax advantage to be a household employee. Keep a lookout for red flags such as clients who want to pay you under the table or avoid paying required household employee taxes. Refer to Family Caregivers and Self Employment Tax for more details.

Step 4: Purchase professional liability insurance (independent contractors only)

Liability insurance is a way of protecting you in case of an unexpected accident such as your client falls or gets injured while in your care. It also safeguards you from unfounded charges of abuse or neglect. Keep in mind some clients are confused and their accounts of their care may be distorted. Liability insurance also covers legal fees in the event you are sued. Certified nursing assistants are responsible for tasks like measuring vital signs, administering medicines, and nutritional requirements. There is always the chance for errors but liability insurance will give you peace of mind for less than $100/year. A liability insurance agency to consider is Healthcare Providers Service Organization (HPSO).

* Private hire caregivers are household employees, therefore, the employer should handle liability insurance.

Step 5: Create a work agreement and plan of care with your client.

Outline specific work hours, pay rate, pay schedule, overtime, and holiday pay. The plan of care should detail your expected caregiving tasks, client preferences and needs. Your employer, either the client or their family, should sign off on this agreement and plan of care as well as any later revisions.

Step 6: Maintain a filing system that keeps a record of any business credits or deductions.

Quickbooks is popular among self-employed folks but may be more sophisticated than you need when a household employee. It may be easier to create color coded files to add your receipts of business expenses when they occur. Organizing your expenses during the year will simplify filing your end of year tax returns. For example did you know that your mileage, uniforms and caregiver tools are tax deductible?

Step 7: Ensure that you have a good system to keep track of your appointments.

Your smart phone calendar is readily available and convenient to help track your appointments. Keeping a precise schedule of dates and times, whether on paper or your phone, will help you be more reliable. Ask your client (or their family) to sign verification of your work hours daily and keep organized in an accessible binder. Or perhaps keep a log in a composition notebook that both you and the client sign off on each day. Regardless of your methodology, documentation of work hours will ensure accurate paychecks and easy reference should questions arise.

Step 8: Create marketing materials to sell your professional caregiver services.

There are a multitude of popular websites, brick and mortar stores, and personal software programs that will develop and print your business cards and/or flyers. Emphasize your training and certifications, as well as your years of experience. Be prepared to provide recommendations from former clients. Distribute flyers at senior centers, adult daycares, doctor offices, and health departments. Post your business cards on community bulletin boards. Determine your demographics (elderly, disabled youth, etc.) to focus your recruiting efforts. Post your resume online! Highlight your skills and experience and post your resume on senior care sites like CarePathways to grab the attention of families looking to hire private caregivers.

Step 9: Research and determine a competitive fee for your services

Your pay rate should be based on cost of living, your actual skill level, certifications, and rates charged by providers in your community. The most obvious way to uncover these rates is simply to call around to agencies and inquire. Refer to various employment websites to see pay rates posted for caregiver jobs. Network with fellow caregivers to find out what they charge and price yourself competitively among them.

Clare Absher RN BSN

About the Author

Clare Absher is a Registered Nurse with 44 years of experience. Most of her experience is in home health serving as a caregiver, educator, patient advocate, and liaison between families and community resources. She has also worked in acute care, assisted living, and retirement settings. She is passionate about helping families care for their elderly loved ones at home.

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