Obamacare Will Make The Elderly Will Pay More For In-Home Care


The answer is simple: your parents will have to pay more for in-home care in order to pay for other people’s health insurance as a result of the new Nationalized Health Care program that is going through Congress right now.


Those who control the Federal and California state governments continually increase the taxes and regulatory burdens on businesses.  As John Mackey (CEO of Whole Foods) recently said in the Wall Street Journal, “…Washington treats companies like cash dispensers.”

The cost of non-medical in-home senior care services is directly tied to labor cost, that is, the cost of having employees who provide those services.  When the government increases taxes on home care businesses (including hidden taxes disguised as “fees” or “penalties” on employers related to employee health insurance), those businesses must pass on those increased costs by increasing the fees that they charge for those services.

One example of such labor cost increases in the near future is the new health care “reform” legislation (which I will call  Nationalized Health Care here) that is making its way through Congress. From all appearances, companies like ours will have to pay a new 8% tax on our employees’ gross wages to help pay for Nationalized Health Care.

Why would this cause the cost of your parents’ in-home care to increase?

The cost of caregiver wages (not including the taxes and other payroll costs that we already pay) for our services is approximately equal to 60% of the fees that we charge for in-home care services. The cost of the payroll taxes and other payroll costs that we already pay for the privilege of having employees is approximately equal to 30% of payroll, or 18% of the fees that we charge.

Our other overhead expenses for rent, insurance, our office personnel, quality control nurses, accounting, legal and other expenses is approximately equal to 15 percent of the fees that we charge.

Real-Life Numbers

Ok, so let’s do the math: as of this moment, before any new taxes for Nationalized Health Care or other new government taxes on employers, our net profit (the amount that my family has to live on) is:

100% Revenue
-60% Wages
-18% Payroll taxes and other labor costs
-15% Overhead expenses
7% Net profit for the owners’ family to live on before new government taxes

With the new Nationalized Health Plan that the current government wants us to have, we will have to pay another 8% of gross wages, which is 5% of Revenue.

So, if we don’t raise our prices for in-home care, our net profit, the money that our family lives on, would be cut from 7% of sales to 2% of sales. That would mean that our family would have to live on 70% less than we have now to live on.

We can’t live on 70% less. Who on earth can do that?

So, we (and every other in-home care company) will have to raise our prices by 5% just to pay for the additional taxes that we’ll have to pay for Nationalized Health Care. On average, that will mean that we will have to raise our prices by $1.50 per hour for hourly care and $15 per day for 24-hour “Live-in” shift care.

And all this new cost for our client’s care will just go to pay the government more taxes with no benefit to our clients and little or no benefit to our caregivers. Ironically, “Health Care Reform” will end up costing our elderly clients more just to pay for other people’s health care.

As they say on TV, “But wait, there’s more!”

In future articles, we will take a look at more new taxes and mandates that are coming in the near future for employers, raising home care costs and therefore the cost of your parents’ home care. Those new taxes include

  • A new 4% flat tax on gross receipts proposed for California companies so that the California government won’t have to control its budget
  • A 300% increase in the tax rate for unemployment taxes paid by employers in California to pay for ever- increasing unemployment benefits (although most people dont’ know it, unemployment insurance benefits are entirely paid for by taxes on employers, not paid by taxes on employees; when unemployment benefits are increased or extended, employers’ taxes eventually also are increased)
  • A proposed 30% increase in the cost of Workers Compensation insurance in California (which is a disguised but still very real tax on employers)
  • A proposed change in the overtime rules for home care workers that will have the effect of requiring home care workers to work for  two or three different employers instead of working for just one company to earn enough to make  a living.

Is this progress? Is this the “Change We Need” that we were promised?  What do you think? I look forward to your comments.


[get-post tag=”about_us”]

Tim Colling
Tim Colling

Tim Colling is the founder and President of A Servant's Heart In-Home Care, which provided in-home caregiving services in San Diego County, and also of A Servant's Heart Geriatric Care Management, which provided
professional geriatric care management services and long term care placement services in San Diego County. Tim has more than 30 years of experience in management in a variety of industries. He held a Certified Care Manager credential from the National Academy of Certified Care Managers. Tim is also a Certified Public Accountant (retired), and received his Bachelor’s Degree in Accounting from California State University at San Diego. In addition to writing blog posts here for the Servant’s Heart blog, Tim also is a regular contributor to HealthLine.com and to FamilyAffaires.com as well as blogs of other eldercare services provider companies. Finally, Tim is also the president of A Servant's Heart Web Design and Marketing, which provides home care marketing as well as website design and online marketing for those who serve the elderly and their families.

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