The Illusion of Support
On paper, California’s In-Home Supportive Services (IHSS) program looks like one of the most compassionate programs in the country. It allows elderly and disabled residents to remain at home instead of being forced into institutions. It saves counties millions every year. And it employs more than 500,000 caregivers statewide — making it one of the largest workforces in California.
But peel back the layers, and you’ll find a system deliberately structured to keep caregivers poor today and destitute tomorrow. We don’t get employer health insurance. We don’t build Social Security credits if we live with our recipient. And our paychecks — which show zero deductions across the board — are proof that the state has designed IHSS not to protect caregivers, but to save money at our expense.
The Health Insurance Loophole
Under the Affordable Care Act (ACA), any large employer with 50+ full-time employees must provide affordable health insurance to workers averaging at least 30 hours a week. IHSS dwarfs that threshold — half a million providers is not just “large,” it’s massive. So why don’t IHSS caregivers get employer health insurance?
Employer of Record Loophole
- Legally, IHSS caregivers are considered employees of the care recipient, not the county or state.
- Counties are only the “employer of record” for the purpose of collective bargaining. They negotiate contracts, but they don’t take on day-to-day employer obligations like health insurance.
- And since grandma isn’t running a business, counties argue the ACA requirement doesn’t apply.
Fragmented Employment Status
- Even if you work 70 hours a week, the state counts you as working for multiple “employers” (your recipients), not as a full-time employee of one large entity.
- That technicality sidesteps the ACA mandate.
Patchwork “Benefits” Instead of Insurance
- Counties offer stipends or limited health coverage in union contracts, often with strict hour thresholds (74, 80, even 85 hours per month).
- Many plans don’t cover dependents. Some counties cap enrollment, leaving workers on waitlists.
- Fall below the threshold one month, and you lose coverage.
State Acknowledgment
California admits that IHSS wages, when excluded from taxable income, help caregivers qualify for Medi-Cal. Translation: instead of offering employer insurance, the state pushes us into poverty-based health coverage.
A System Built Before the ACA — and Maintained After It
When IHSS was created in the 1970s, lawmakers wanted recipients to have control: hire, fire, and supervise their own caregivers. This “consumer-directed” model was supposed to empower families and limit county liability.
That was decades before the ACA. But when the ACA passed in 2010, California had a choice:
- Redefine IHSS caregivers as employees of a single, large employer (the county or state) and provide health insurance, or
- Keep the legal fiction that we’re employed by our 90-year-old mother or disabled child — and avoid the ACA mandate.
The state chose the second option. That wasn’t an accident. It was a deliberate policy decision to save money.
The Retirement Trap: IRS Notice 2014-7 and Family Employment
If the health insurance loophole traps us in Medi-Cal today, the tax loophole ensures we’ll face poverty tomorrow.
IRS Notice 2014-7
- Allows live-in caregivers (parents, children, spouses) to exclude IHSS wages from federal and state income tax.
- Paychecks show $0 in federal and state withholding.
Family Employment Exemption
- Federal law says wages paid by a parent to a child, or by a child to a parent, are not subject to Social Security (FICA) or Medicare taxes.
- IHSS applies this across the board for family live-in providers.
The Result
- No income tax withheld.
- No Social Security credits.
- No Medicare credits.
- No state disability or unemployment insurance.
Proof: My Own Social Security Record
Here’s what this looks like in real life. I’ve been an IHSS caregiver for decades. I work full-time hours — 70 per week. But when I look at my Social Security record, entire years of my work vanish.
| Item | What My Record Shows |
|---|---|
| Paychecks | FICA 0 • Medicare 0 • SDI/DI 0 |
| SSA Credited Earnings | 2016–2022: $0 each year (no credits) • 2023: $5,625 • 2024: $9,611 |
| What It Means | Those $0 years do not count toward Social Security retirement or disability eligibility. |
And I’m not unique. This is the reality for every family caregiver living with their recipient.
The Consequences
No Retirement Security
- Social Security requires 40 credits (about 10 years of covered work) to qualify.
- Every year with $0 is a year lost forever.
No Disability Coverage
- If caregivers become disabled, they can’t qualify for Social Security Disability without recent work credits.
No Survivor Protection
- Our families may not receive survivor benefits because our work wasn’t credited.
No Safety Net
- No state disability. No unemployment. Nothing to fall back on if caregiving ends.
Why This Matters
IHSS was designed to save the state and counties money by keeping people out of institutions. And it works — institutional care is far more expensive than in-home care.
But the savings come directly from our sacrifice:
- By denying us employer health insurance, they shift the cost to Medi-Cal.
- By excluding our wages from Social Security, they erase our future security.
- By keeping us in legal limbo, they exploit our love for our family members.
What Needs to Change
1. Recognize Caregivers as Real Employees
The state must be the employer for all purposes, not just bargaining.
2. Provide Employer Health Insurance
IHSS is the largest workforce in California. We deserve the same ACA protections as any other full-time employee.
3. Count IHSS Wages Toward Social Security
Caregiving is work. It should build retirement and disability credits.
4. Raise Wages to a Living Level
Even if credits are restored, poverty wages mean poverty retirement.
Conclusion
IHSS caregivers are saving the state billions by keeping loved ones safe at home. But in return, we are being set up for poverty in old age. My paycheck shows it. My Social Security record proves it. And every family caregiver in California is living this same trap.
The state didn’t design IHSS to support us — it designed it to avoid responsibility. That’s why today, the largest workforce in California has no health insurance, no retirement, and no safety net. And unless we demand change, that’s exactly how they intend to keep it.
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