Although many people are willing to voluntarily care for a parent or loved one without the promise of compensation, entering into a caregiver contract (also called personal service or personal care agreement) with a family member can have many benefits. A caregiver contract can recognize and reward the family member providing assistance. It can help alleviate tension between family members by ensuring that the work is fairly compensated. In addition, it can be a key part of Medicaid planning, helping to spend down assets so that the senior might more easily qualify for Medicaid long-term care benefits, if necessary.
The following are some things to keep in mind when considering the implementation of a caregiver contract:
- Meet with an elder law attorney. It is important to get assistance with drafting the contract, especially if the senior may need to qualify for Medicaid long-term care benefits.
- Caregiver’s duties. The contract should set out the caregiver’s duties, which can include tasks such as transportation, scheduling and attending doctor’s appointments, grocery shopping, helping pay bills, and companion care. Since the contract may last for the senior’s lifetime, it is important that it addresses all possible care needs, including those that may be necessary for the future.
- Payment. For Medicaid purposes, it is very important that the caregiver’s pay is reasonable. Excessive compensation can be viewed as a gift for Medicaid eligibility purposes. The caregiver’s pay should be similar to, or slightly less than, that of other similarly qualified caregivers in the area. It often is prudent to have a qualified individual evaluate the elder’s care needs and the caregiver’s skills to determine appropriate compensation.
- Taxes. The caregiver will have to pay taxes on the income he or she receives.
- Other sources of payment. If the senior does not have enough money to pay the caregiver, there may be other sources of payment. A long-term care insurance policy may cover family caregivers or the senior may be able to provide the caregiver with promissory notes that can be satisfied upon the future sale of the senior’s residence. There also may be state or federal government programs that compensate family caregivers. Check with your attorney or local Agency on Aging to get more information