Hiring Parents and Paying Into SS

[pepe28 0]

Cost of medical insurance in the US is a HUGE factor when deciding to bring our parents to live with us in the US. The children can cover parents' cost of living, but paying for their private medical insurance is, I think, possible for very few.

Once our immigrating parents (above 65) become US citizens, they will be eligible to buy Medicare Part A.

They can get Part A at age 65 without having to pay premiums if they are already receiving SS benefits.

But, if they have not worked in the US for 10 years, they are not entitled to Social Security benefits. Older parents are not likely to work 10 more years full time.

This is a painful thought process for many children: What to do with our parents; we want them to be with us here in the US, but we cannot afford the crazy health insurance premiums.

Instead of sanding our 70+ year-old parent to work at a place like Walmart for the next 10 years (and I've heard stories that companies would prosperously not hire the elderly full time so they don't have to cover their health insurance), could we maybe "hire" them ourselves and just pay into SS over the next 10 years, (paying for Medicare during that time)? Since majority of those parents will live in their children's households, can we "hire" them for childcare, house work, maintenance,...?

Would that qualify to be able to pay into SS? Or would they have to work for an "official" employer?

The idea is to just pay into SS for them so that eventually they will be eligible for SS benefits. Is there a minimum monthly/annual SS contribution required?

I know that US is not a socialistic country, and we cannot all free-load. But the cost of health insurance has been abnormally inflated over the years (someone must be making money out of it), and eventually something will have to be done about it. If the cost was more reasonable, more people would be able to pay for it themselves and not look for government assistance. But, it's not that way, it's broken, and not much we can do about it. The way I look at it, I have to pay into SS right now, and I am pretty sure it won't be around by the time I retire. So, I'd like to use those funds for my parent to use.

[Darnell 8,479]

Would that qualify to be able to pay into SS?

They don't pay into it, directly - it's the employer, deducting from the wages and paying into SSA directly.

So, suggest you put together the LLC, and figure out the monthly costs of maintaining the LLC . I think yer on to something here, but if the math doesn't work out for you ? it's a lost cause.

[pepe28 0]

They don't pay into it, directly - it's the employer, deducting from the wages and paying into SSA directly.

So, suggest you put together the LLC, and figure out the monthly costs of maintaining the LLC .

Understood, the child would be the "employer" and pay into SSA on behalf of the parent.

By LLC you mean Limited Liability Company, right? So, you think in order to pay into SS, I'd have to be a registered company? I was thinking you could "hire" parents in the same way you hire a babysitter but I guess it's different since I don't have obligation to pay into SS for the babysitter.

I am not sure my home association would be happy with me having a business registered at my house. But I really have no idea what all goes into that.

Edited March 4, 2013 by pepe28

[Darnell 8,479]

business can be registered at a PO Box address, ya know.

I suggest LLC cause there's other tax benefits for the company. Who knows? your parents might want to get in on the cross-training stuff and you take advantage of that as a tax break for employers.

Regardless of what you choose in the end, it makes lots of sense to do a cost-analysis on all options and see where the sweet-spot is.

Edited March 4, 2013 by Darnell

[catknit 144]

There is a cost to Medicare Part A - it's just auto-deducted from a person's SS check. I believe it's currently $99/month. Also, keep in mind that Part A covers hospitalization only and at 80%. So, if Dad needs a bypass at $150k, the senior is on the hook for $30k - granted the hospital may have additional charity care, etc, etc but he will be billed and possibly put in collections for $30k. This is why supplemental insurance is so attractive to many seniors. That then drives up your monthly costs [Parts A, B, and D] to around $250 in some cases and as high as $600 in others [the highest I've seen is $800/month and the senior was still on the hook for about $800 in Rx costs per month with copays/generics/etc]. Is it a possible solution? Maybe. But, it isn't "free" health care.

I actually know a family who does this - the mom is hired by them as their child care provider. They must pay at least minimum wage, follow all tax laws, all employer laws, pay the employer contribution into SS/Medicare, and be cognizant of any state/county/local laws pertaining to what they are trying to do. This is sort of an all or nothing game - you'd want to have the I-9, W-4s, payroll tax quarterly, etc etc. Either the parent is an actual-real employee of the household or they aren't. You can't cut corners just to get the perks out of this situation. I believe my friend's family even has the state/county mandated disability insurances and all that too. [An interesting other option would be for mom to set up a company providing the services and pay self employment taxes from her end with payment by monthly billing to you for childcare - but this would be something that you'd want to get professional/CPA help - you may be able to get a childcare tax deduction that way too].

For the family I know, the numbers worked out AND the mother was not super old when she started working in the home - late 50s I think. I can not see this being a realistic method for a parent in their late 60s, 70s, +.

[WorldTravelers 5]

I was thinking about the same thing.

@catknit: That is an interesting concept with self-employment. It's worth looking into. I wonder if it's more work than all that paperwork for starting up a business, which would require some help from a CPA.

If you are self-employed, I assume you still pay those taxes as percentage of your earnings? Or do you contribute some required minimum even if you don't get pain that month? Again, maybe a question for CPA.

You also brought up another point: all three (federal, ss, and medicare) taxes should be paid monthly. But if the numbers work out, having Medicare cover 80% and getting supplemental insurance for the rest is still better than having to get 100% private insurance.

Edited March 4, 2013 by WorldTravelers

[catknit 144]

I think for most people, if they tried to do this, it would need to be structured as a self-employment gig for the parent. And yes, as self employed, you do pay a percentage of your earned income - 12.4% for SS/Medicare [if memory serves]. If you are hired by someone, the employer and employee share the tax [ie you pay 6.2% and your employer pays 6.2%]. Side note - this is one of the reasons freelance work or contract work is appealing to a lot of employers, you stick the worker with all the payroll taxes [at the end of the year the worker gets a 1099 instead of a W2].

I think one place where you need to be careful is fulfulling any hours/pay requirements for the work to count as quarters into the SS program. I don't believe you can get away with - well, mom watched junior for 8 hours last month and 20 hours this month. There are guidelines about fulltime work, minimum pay etc.

The family that is currently doing this already has a property management company and they just added mom as an employee - everything was completely set up re: dealing with employees, it was just hiring a new person. All the payroll, tax payments, etc were already being handled by someone.

Now, to add a weird twist to all of this - I know another family with a slightly different set up that could help keep a middle income family afloat when looking at all of this as an option. Let me start out by saying I totally don't agree with this approach for personal reasons but there is a back story between mom and the son-in-law as best I can gather. Also, everyone here is USCs, no immigration stuff to contend with and all are retired [including the adult kids]. So, they have widowed mom, married couple who are retired and grand kids to the married couple. Widowed mom pays rent to the married couple [ ], married kids pay the widowed mom to watch the grand kids [who are technically the widowed mom's great grand kids]. Some months widowed mom makes some pocket change, some months widowed mom is just paying less rent. Here's the thing with this family - and someone in this type of situation in general - if you can not take the business aspect of this personally [which I would never be able to tease out, I'd be livid if my husband wanted to charge my mother or his own mother rent!] you could just "recycle" money every month and pay out only the taxes from a net amount standpoint.

Also, to add insult to injury - they were charging the widowed mom rent before the grand kids were placed in their care...I don't know, maybe others wouldn't see this as weird.