The Financial Cost of Caregiving

by Audrey Miller on April 25, 2011

in Elder Care, Estate Planning, Geriatric Care Management

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April 25, 2011; By: Audrey Miller
All About Estates

As the issue of caregiving is now getting election coverage, the costs of caregiving need to be better understood. These include tangible costs such as financial expenses and loss of income, as well as “soft” costs, such as emotional challenges and loss of opportunity faced by families pressed into service to care for an elderly family member. For those families who decide to purchase care, this article will review the financial cost of hiring a caregiver.

For illustration purposes, the average Personal Support Worker (PSW) rate from a for-profit agency (Toronto 2011) is estimated at $23/hour. Harmonized Sales Tax (HST) of 13% is added in most situations. Let’s see what these calculations might be:

Five hours of purchased care per day = $115/day or $805/week or $3,461.50/month (plus HST).

Nine hours of purchased care per day = $207/day or $1,449/week or $6,230.70/month (plus HST).

Full-time (24-hour) care can be very expensive and is not affordable for many Canadians. Helping you decide what type and how much care is needed will be addressed in another article.

Typically when hiring 24-hour care, there are a few options to explore. These can include hiring privately or using a home healthcare agency and can involve live-in and/or live-out staff: There are pros and cons to consider when choosing to hire privately or through an agency. A professional care manager is able to help you decide which is better for you and your family.

Option 1: Live-in caregiver sponsorship program: (privately hired)
The Live-in Caregiver Sponsorship Program is offered by the Government of Canada through Human Resources and Skills Development Canada (HRSDC). This program consists of Canadian employers hiring foreign workers to come to Canada to help care for the elderly or persons with disabilities.

The HRSDC program outlines the qualifications, satisfaction guarantee, and expectations for the live-in caregiver program.

Things to note :
Cost: Sponsorship from out of country: Placement fees range from $1,500 to $3,000 (one time) plus HST. This process can take 5-6 months if the worker must come from overseas. Alternatively, individuals may already be here, and are available for immediate hire

Hours of Work: Live-in caregivers work five days with two days off. Maximum working hours per week is 40 – 44 hours.

Payment to Caregiver (based on $10.25/hour, the current minimum wage in Ontario): Live-in caregivers would be paid $1,264.40/month, which is net of remittances to Canada Revenue Agency

Remittance to CRA by employer for CPP, EI, WSIB, and taxes for a monthly total of $1,763

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– Caregiver is entitled to two weeks vacation annually (remember, you will need to hire a replacement for these two weeks)
– Caregiver is entitled to be paid for ten public and civic holidays at their regular hourly rate if they take the day off (remember, you will need to hire a replacement for these holiday days if the caregiver is not working). Should the worker opt to work the public and civic holidays, they must be remunerated at time-and-a-half or $15.37/hour)
– Caregiver must be provided with their own bedroom.

Estimated Cost of Annual Live-In Caregiver:
Live-in Caregiver wages (HRSDC): $1,763 monthly x 12 months (HST not applicable) $21,156
Weekend care: average $225 x 4.3 weekends/month or $967.50 x 12 months = $11,610
Two weeks vacation, care provided by an agency:
Weekdays: Assumed to be provided at an agency rate of $23/ hour: $23 x 24 hours x 10 days =$5,520
One week coverage for worker illness, provided at agency rates of $23/hour x 24 hours x 7 days=$3,864

Total (HST to be added to all but the first item) $42,150

Option 2: 24-hour In-home Personal Support Worker (PSW) – Agency Hire
The agency pricing shown below is based on the understanding that the caregiver is able to obtain a full night of sleep (6-8 hours), with no more than two awakenings. Pricing includes: mandatory remittances, WSIB, general insurance, vacation, benefits etc. Public and civic holidays are invoiced at 150% of the regular rate, to cover the time-and-a-half requirement. There are no guidelines for Community Home Care Agencies with respect to remuneration and therefore each agency tends to provide services at different rates. You will have to research costs in your local community. The cost associated with 24-hour care at various daily rates is shown below.

Agency A: regular rate of $275/day
$275 x 356 days = $97,900 + HST
$412.50 x 10 public and civic holidays = $4,125 + HST
Total Cost= $102,025/year + HST

Agency B: regular rate of $205/day
Total Cost = $76,055/year + HST (using the same calculations)

Agency C: regular rate of $195/day
Total Cost = $72,345/year + HST (using the same calculations)

Based on the above sample rates, the estimated average annual cost for an agency-hired live-in caregiver is $83,475.
If overnight awake staff is needed, the hourly rate would apply to the full overnight shift.

Given the high cost of purchased care, more and more family members are taking on the caregiving role for their elders. While the various political parties are discussing caregiver allowances and caregiving tax benefits, the onus of care (both physical and financial) will remain on the shoulders of the family.

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