Part 3: What Are The Costs Involved (including hidden costs)?

Note: This post is part of an educational E-Series for Care Managers that outlines the Legal, Financial, and Practical sides of private-hire live-in care. Every other week, a new set of questions will be addressed. 

In Part 1 and Part 2 of the series we learned when private live-in care is an option for your clients, and just as importantly, when is it NOT an option.

Now that you know the parameters, you may come across a family who look like a good fit, but even if they are, is it an option for them FINANCIALLY? That is the question that we will answer over the next 2 parts of this e-series, as we go over the FINANCIAL side of live-in care.

We will discuss these questions:

  1. What are the costs involved (including hidden costs)?
  2. How payroll and workers comp are managed on the private market.
  3. Does LTC insurance or VA Aid and Attendance reimburse your clients for a private-hire live-in?
  4. Can the family reduce the caregivers pay for “room and board” expenses?
  5. Is the family required to provide the live-in with health insurance or other benefits?

This week, we will tackle the biggest of the five questions.

1. What are the costs involved (including hidden costs)?

This is the magic question that all our clients want to know. It’s tempting to quote the live-in’s pay as the simple answer, but that would be very misleading.

First, let’s define what we mean by “cost”, as there are many components and not all will apply to every situation. A good comparison would be “How much does a house cost?” It involves much more than the price of the property.

House Cost Components

  • Realtor fee
  • Mortgage
  • Property taxes
  • Homeowner’s insurance
  • Ongoing maintenance

In the same way, there are similar components that affect the overall cost of having a private-hire live-in.

Live-in Care Cost Components

  • Cost of finding, screening, and hiring someone.
  • Payroll/payroll service
  • Payroll taxes
  • Workers comp insurance
  • Respite coverage / other

Let’s break them down.

Cost of finding, screening and hiring someone.

This single item has a wide range of possible costs. On the two extremes, we have:

  1. The live-in could have worked for a neighbor or friend, and been referred from one family to the other at a local BBQ. Cost is “$0”.
  2. On the other hand, a family could have gone through a nanny or employment agency to find, screen and vet a professional live-in for them to meet. An agency’s one-time fee averages 15%-25% of the live-ins estimated annualized salary. Using the average live-in’s salary, their one-time fee would range from $11,661-$19,435, and most come with a 90-day replacement guarantee.

There are, of course, many alternatives between these two extremes. They could use an on-line database like, or SitterCity, to get contact information of potential candidates to screen, or they could hire a professional service like yours or mine to help them at considerably less cost than a nanny agency.

Payroll/payroll service + payroll taxes

In March of 2019, we asked over 1,000 live-in caregivers that we have worked with or received applications from, from across the country, to help us understand their jobs better by filling out a short survey.

It was fascinating to see the results and compare regions. Some very big differences were seen but overall pay rates, when averaged out, were very similar except for some pockets of the Northeast, and California was off of the charts!

We used the information collected to calculate the family’s out of pocket expense, including their payroll taxes and fees for a payroll service. The results:

The average payroll + payroll taxes + payroll service was just under $250 per day.

Keep in mind that the $250 average is just that, an average. There is still lots of swing in that number. One of the reasons for the swing is from the 2015 changes to the Fair Labor Standards Act (FLSA).  IF the live-in is not permitted to have five total hours of sleep on any given night, they have to be paid for the entire 8-hour sleep shift, not just the time that they worked.

Secondly: If the live-in doesn’t get five continuous hours of sleep “most nights” in a workweek, then they must be paid for their entire 8-hour sleep shift for that entire week! Breathe. Here is where you really want to have a live-in care expert on your side.

Want to keep your clients out of hot water? Call me if you want to discuss the sledgehammer part of the law and a way that we were instructed by the payroll experts on a way to avoid it, without increasing your client’s costs. There are some exceptions, and I can tell you more about them as well.

This is a good example of why clients pay people like you and I. To guide them down those frightening, unknown paths, that we have walked hundreds of times already with other clients. 

Workers comp insurance

Workers comp insurance covers when an employee gets injured on the job. An example could be a live-in who strains her back during a transfer. In the decade that I’ve been doing this, I have never had a client who had to use their policy. I think that their greatest benefit is the peace of mind that it brings the adult children of the care-recipients, as its one less thing that they need to worry about.

It’s required in some states for household employees, and not in others. In the states where it is not required, many families say a prayer and cross their fingers, or tell us that their homeowner’s insurance will hopefully cover any injuries. That being said, whether your client’s state requires it or not, it’s always a good idea to get it.

Policies are easy to obtain in most states and average about 4% of payroll, or $260 a month. That’s not too bad for the peace of mind it can bring. We will talk more about workers comp next week, and I’ll share with you the list of states that require it.

Respite Coverage / Other

Live-ins DO NOT work or stay in the home 24/7. We already addressed this in parts 1 and 2 of this series, but let’s look at the cost component of the live-ins respite.

Most live-in positions that we staff are for either 6 or 6.5 days. That leaves 8 to 24 hours of respite for the family to cover while the live-in is off. Many times the family can cover it themselves, but what if they cant?

To calculate your family’s total out of pocket costs, you should include the cost of a local agency filling in, using hourly aides. According to Genworth’s 2018 “Cost of Care” survey, the national average for home care is $22 hour. Just multiply that (or the hourly rate in your area) by the number of hours needed each week, then multiply that weekly amount by 52 weeks and divide that by 12 months to get a “monthly respite budget”.

For those of you who are not math whizzes, here is an example. If they need to cover 8 hours of weekly respite, the calculation would be:

 8 hrs x $22 = $176 wk x 52 wks =$9,152 yr / 12 months = $763 per month.


There is one other cost that families often forget about. Most live-in positions include “room and board”. Room is obvious, but what are the costs associated with board? Board normally includes “all meals”. There is NO law that I know of that requires this, but it is the norm in the industry and is usually expected by applicants to be included in as part of the benefit package.

So how much food does one person eat? We wondered the same thing, as new clients often ask for our guidance when creating budgets. We researched it and found a recent study that had the answer!

The average adult in the USA consumes $3,900 of groceries per year. If you do the math, that’s $325 per month.

Now let’s bring it all together. Using the information in this part of the e-series, how much does the average private-hire live-in “cost” a family per month? The only unknown variable will be the placement fee.

Payroll + Workers comp + Respite coverage + Board = Recurring monthly cost.

This should give you a realistic number to compare to the alternatives and see if live-in care is even an option FINANCIALLY for your client.

Lastly consider any onetime fees, like home remodeling, or the cost of finding and screening a professional live-in to make this all possible.  

Stay tuned…Next week the series will continue, and we will answer some of the below FINANCIAL questions.

  • How payroll and workers comp are managed on the private market.
  • Does LTC insurance or VA Aid and Attendance reimburse your clients for a private-hire live-in?
  • Can the family reduce the caregiver’s pay for “room and board” expenses?
  • Is the family required to provide the live-in with health insurance or other benefits?

CA and MA Care Managers- call me to discuss your states, both of which have special labor laws that affect the costs for your clients.

FYI-  I will be on vacation (Jersey Shore beach house!) with family from 8/3-8/10.  If you need me that week, its best to email me, and I will call you when I’m off the beach and my hands are free of ice cream 🙂

David Petroski

888-250-2631 x700

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