How to Create a Caregiver Contract
Last Updated: December 17, 2019
Little by little, your loved one’s needs have grown, and you can no longer balance providing the care they need with a full-time job or other responsibilities. You could use some assistance, but prefer to keep caregiving in the family.
Now, you need to create a caregiver contract with your parents and siblings to set expectations and responsibilities. Where do you start?
A Caregiver Contract
A caregiver contract, also often called a personal care agreement, ensures that all family members are on the same page when it comes to elder care responsibilities.
A caregiver agreement protects the person who is becoming a full-time caregiver. It can also help families avoid future conflicts over personal care as well as compliance issues with Medicaid in the event a nursing home is eventually needed. Robert E. King, Esq. of Legally Nanny, states: “These contracts are vital to avoid ambiguities which can create acrimony down the road.” Make sure everyone is in agreement by putting expectations and responsibilities into writing. This can help you to stay on good terms with your parents and siblings throughout the elderly person’s illness and beyond.
Creating a Caregiver Contract
Here’s how to create an effective caregiver agreement:
Begin the discussion
First, everyone in the family needs to plan a time to discuss the specifics of elder care arrangements. Try to find a time when everyone can be involved and weigh in with their opinions on the subject as it pertains to their elderly (even if some attend via phone or video conferencing). Have an idea of the main points you want to discuss:
- A calendar of care needs and when caregiving decisions need to be made
- The cost of other types of senior care
- The loved one’s specific personal care needs
- Who’s available and willing to help in what ways
- Where your loved one will live
- What is and isn’t compliant with Medicaid
Expect this talk to take some time, and don’t be surprised if there are disagreements or strong feelings. This is a tough subject all around as it forces everyone to face a parent or senior loved one’s declining health. Do your best to stay respectful throughout the discussions.
Consider a mediator
Did your first discussion devolve into arguments or get too heated for you to make progress? That’s normal. Attorney Thomas J. Simeone explains: “Having one member serve as a formal caretaker often brings out underlying familial issues, including competitiveness, favoritism, jealousy and the like.”
That’s part of why it’s important to have a personal caregiver contract, to begin with, but it also means that you may need to bring in some unbiased help to settle the details. Look into elder and family mediators who are skilled at helping families work through exactly these types of issues. It could save you a lot of energy and time.
Consider an accountant
Everyone involved in a caregiver contract needs to understand what it will mean for their general finances and specific tax situations. Handling personal elder care yourself or hiring someone else to do it can be costly. So, it’s a good idea to comb through your finances and see what you can afford.
Set up an appointment with an accountant to discuss what you have in mind and see what recommendations they have. Their advice can guide you toward making sound financial decisions to ensure you can afford to pay for continued assistance as well as help you understand Medicaid compliance.
AARP notes that when a family member agrees to act as the personal caregiver, the compensation received may be taxable income.1 This would require those paying the money to file related paperwork and pay employer taxes. An accountant can help family members to decide if this is applicable to their circumstances and how to handle it.
Decide on the details
This part is hard but likely to be easier if you’ve consulted with an accountant or mediator. Now you want to meet up again to get all the specifics figured out and in writing. This should include the following items:
- Benefits: If the caregiver is leaving a job, then they’ll be giving up a potentially more secure income and significant employment benefits. Discuss how to fairly handle health insurance costs, paid sick days and vacation time.
- Compensation: Now figure out a reasonable rate to pay the full-time caregiver for the hours they’ll be working. This should be an income that’s comparable to what professional caregivers are paid. Pay attention to Medicaid compliance.
- Dates: When will the duties outlined in the contract begin? Will you set an end date now or a date to revisit the terms to see if everyone still agrees?
- Expenses: As the main person helping to run errands and pick up prescriptions for your loved one, the caregiver is likely to incur expenses. Discuss and determine how the family will handle that as well.
- Hours: The caregiver contract defines a job. You should include set hours for work and keep them realistic. How many hours a week will the primary caregiver be available to take care of your loved one? Which hours? Who steps in the rest of the time?
- Payment terms: When will the caregiver get paid? Weekly on Fridays? Will they receive the money by bank transfer, check or another method? Make sure you are in compliance with Medicaid standards.
- Responsibilities: “Caregiving” is a general term, but you want to lay out specifics here. Think in terms of the activities of daily living (ADLs) that are commonly used in the senior living industry to help define the level of need seniors have. Name the specific responsibilities as clearly as possible.
Obviously, you’ll also need to figure out who will contribute money and how much. How will the payments be divided between the senior loved one’s estate and the contributions of other family members? Are the payments compliant with the Medicaid rules and regulations?
You also need to make a plan now for what happens in the case of an emergency. Simeone states, “It is vital to have other family members agree to be back-up caregivers because emergencies that prevent the caregiver from working will arise.” Having a plan in place for that now will help you avoid future confusion and disputes. During this step, put everything you agree to in writing. Having a document that you can all check in on and refer to is crucial.
Discuss meeting with a lawyer
It’s not always necessary to meet with an attorney to finalize a caregiver contract, but there are a lot of cases where it’s a worthwhile step to take. If you experienced much conflict in hashing out the details, then making sure the final document is officially recognized by everyone involved is important. Or if you could use additional input on how the contract affects something like future Social Security payments or tax liability, then a lawyer is a must.
In addition, if your loved one lacks the capacity to sign the agreement, then you’ll have to involve whoever has the Power of Attorney. If that person doesn’t agree with the terms, or if it’s the same person set to become the caregiver, then a lawyer can help you work out the issues that arise.
Tackling the Tough Questions
When creating a personal care agreement, family members may often overlook some important questions. This is why working with professionals often proves beneficial. Here are some of the tough questions you should consider just in case things do not go as planned.
What Does a Caregiver Agreement Have To Do With SSI Benefits?
Family members who give up their careers to become full-time caregivers often collect their payment in private. They do not report this as income, and the family member(s) writing the checks do(es) not file the money paid to them either. AARP advises against this.
While it may not be illegal, Medicaid may classify the income paid for personal care as gifts. Should the family member receiving care ever need access to a nursing home facility, it could make it more difficult for them to qualify for coverage. This is because Medicaid or Social Security Income is connected to caregiving agreements.
The American Bar Association explains that family members may aim for a “spend-down scenario.”2 This enables you to pay for elder care without jeopardizing the person’s ability to qualify for Medicaid or SSI. Consider speaking with an attorney experienced with Medicaid to see how this may or may not apply to your situation.
Paying for a Caregiver Is What Type of Agreement?
Paying for a caregiver does not necessarily constitute an agreement. A person providing elder care services may get money under the table in an ad-hoc fashion with no agreement established at all. When an agreement is established, it may create an employment contract if the person providing assistance now receives a taxable income. Speak with an account or legal professional to determine if this applies to your specific situation.
What If No Family Member Can Render Assistance?
There are unfortunate instances where no family member is able to offer full-time care. Sometimes family members live too far away and are unable to move or have dependents of their own that require their full attention. When this happens, there are several solutions to consider:
- Hire a nurse or other health professional to offer in-home care services.
- Family members who can offer some time each week might consider taking on the responsibility of organizing the in-home care services and stepping in when the health professional is away.
- Consider long-term care at a facility, particularly if your loved one is ill, or their health is rapidly deteriorating.
How Do You Revoke Non-Parent Caregiver Agreement Forms?
When people think of caregiver agreements, the elderly most often come to mind. However, children may sometimes need care too. The National Center on Law and Elder Rights states that 10% of children live with their grandparents or other non-parent relatives.3 When this type of kinship care is informal, then it depends on an agreement between the parent and the non-parent family member(s) of the child. To make it easier for caregivers to enroll students in school or provide other benefits, some states provide rights through caregiver agreement forms.
How to revoke the agreement created by these forms depends on what the agreement says and the state laws governing the agreement. It may also depend on the health of the grandparent or other relative and their ability to provide continued care for the dependent. Consider working with an attorney to get answers that are more specific to your case.
Creating a caregiver contract can be difficult, but taking the time to clarify the terms upfront can save you a lot of time and trouble down the line. From compensation to nursing responsibilities, it’s important to tackle even the most difficult questions now before they arise at inopportune moments later on.
Have you had any experience with creating a caregiver contract for a loved one? We’d like to hear your stories in the comments below.
1Quinn, Jane Bryant. (2019). Creating a personal care agreement as a family caregiver. AARP. Retrieved from: https://www.aarp.org/caregiving/financial-legal/info-2019/personal-care-agreement.html
2Peck, Kerry R. (2018). Creating effective agreements for payment of family caregivers. American Bar Association. Retrieved from: https://www.americanbar.org/groups/law_aging/publications/bifocal/vol_37/issue_3_february2016/creating-effective-caregiver-agreements/
3National Center on Law & Elder Rights. (2018). Legal basics: Grandparents and other non-parent kinship families. Retrieved from: https://ncler.acl.gov/Files/Grandparents-Chapter-Summary.aspx
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