Caring for a parent or older relative who is in ill health can be a slippery slope. What begins as a weekly visit to make sure everything is OK may gradually turn into daily visits, weekly grocery shopping trips, driving to frequent doctors appointments, and so on. Most people are happy to provide this sort of care and companionship to a loved one, but such care can cut into work time and family life.
Care providers may find themselves working fewer paid hours, or needing to take unpaid time off from work to help a loved one. The financial impact can really become a problem. You may wish you could hire someone to do the work for you, but can’t imagine (or can’t afford) paying a stranger to spend time with Mom.
One solution to this problem is to enter into a Family Care Contract or Caregiver Agreement. A Caregiver Agreement is a contract between the elderly relative and the caregiver, setting forth the types of services that will be provided, and the rate of pay for those services. It is a way for the elder to pay for the care they are receiving without having to hire a stranger; and a way for the caregiver child to provide high-quality care without losing (or without losing as much) necessary income.
Many people are uncomfortable with the concept of a parent paying an adult child for care, arguing that the child should care for the parent simply out of love, affection and duty. Respected sociologist Arlie Russell Hochschild recently published a book –The Outsourced Life: Intimate Life in Market Times – that critiques our growing societal tendency to hire professionals to handle the intimate details of our daily lives, such as caring for loved ones. In light of this trend, a Caregiver Agreement is a good compromise: it can maintain important family bonds while making it financially possible for a child to provide necessary, loving care for an elderly parent.
There are rules for Caregiver Agreements. The rate of pay must be basically equivalent to what the service would cost if you instead hired a home health aid or companion. The contract must be very specific in terms of what care is provided, when, and for how long. There are also tax considerations, for both the elder as an employer and the caregiver as a wage-earner. It is important that all family members are on board, to prevent conflict.
Caregiver Agreements are especially useful in planning for long-term care needs. In Pennsylvania, Medical Assistance (Medicaid) pays for most long-term care, such as nursing home care. There are strict and complicated rules governing eligibility for Medicaid. Having a valid Caregiver Agreement in place can help you prove to the State when you apply for Medicaid that payments made to a caregiver child were not “gifts” that can be penalized, but rather wages paid under a properly negotiated family-care contract.