Little by little, your aging loved one’s needs have evolved, and you may find that you can no longer balance providing the care they need with a full-time job or other responsibilities. Sometimes paying family members for elder care or hiring a caregiver is the best way to receive help with activities of daily living, doctor’s appointments, and household chores. “We don’t want to think about our families as a burden, but caregiving can cause burnout,” says Angela Manz, elder law attorney with Manz Law Firm in Virginia Beach, Virginia. “We need to do whatever we can to lift up our caregivers.”
Learn how a caregiver contract can help your family, along with expert tips to create and manage a legal caregiver agreement.
A caregiver contract — also called a personal care agreement — ensures all family members are on the same page when it comes to elder care responsibilities. It’s a written contract that’s notarized and signed by all parties.
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A caregiver agreement helps families by creating a detailed plan with defined expectations and responsibilities. It also helps families avoid conflicts, and can be a beneficial framework for a Medicaid compliance program, in the event assisted living or a nursing home is needed.
A caregiver agreement should include:
It’s a good idea to review the caregiving contract at least once a year, according to the American Bar Association (ABA). If someone is hospitalized, or if a serious medical event occurs, it can be helpful to review the caregiver contract to make sure it reflects current needs and responsibilities.
“The first step is to find an elder law attorney and plan a discussion,” says Manz. “Adding an attorney to your team allows them to draft a contract that fits your specific needs. If a contract is done incorrectly, it may be unfixable or have devastating consequences, especially for Medicaid. Errors can be time-consuming and cost thousands.”
Ideally, you’ll find a time when all family members can meet with the lawyer together — even if some attend via phone or video conferencing. To find an experienced elder law attorney in your state, you can use the “Find a Lawyer” tool from the National Academy of Elder Law Attorneys.
“A caregiver contract should address more than just care,” says Manz. “You’re managing someone’s life and home by paying bills, balancing checkbooks, shopping for groceries, and scheduling appointments. A lot of responsibility is involved. A caregiver should be reimbursed for their time and expenses.”
It’s important to discuss the following with your family:
While it is an added expense, getting the advice of experienced financial or family mediation experts before you enter a paid caregiving situation may benefit everyone involved.
Manz suggests looking into mediation if families are open to it. “All of the issues people have growing up, like sibling rivalries or heartaches, can come back to life in family discussions, but counseling can help with your frame of mind.”
A mediator can help you have productive conversations and set boundaries. Learn how to find an elder mediator.
An accountant can be helpful, especially for tax implications regarding caregiving contracts, says Manz. It’s important for everyone involved in a personal care agreement to understand what it means for their finances and taxes.
Meet with an accountant to discuss your family’s situation. Their advice can guide you toward making sound financial decisions to help ensure you can afford to pay for continued assistance.
When creating a contract, it’s important to think about financial factors such as Medicaid and taxes for caregivers.
The employer will need to report the caregiver’s compensation on a Form W-2 or 1099. If the caregiver is a family member, they may not owe employment taxes, according to the IRS family caregiver regulations.
The Household Employer’s Tax Guide provides more information about whether or not a caregiver is considered a household employee. It also has information on whether federal employment taxes, such as social security tax and Medicare tax, need to be paid and how to calculate them if so.
Every state in the U.S. has programs that focus on paying caregivers, and many of these programs are available to Medicaid recipients or low-income seniors.
Medicaid is particularly selective when it comes to qualifications for recipients. In addition to federal requirements, each state has its own set of rules and regulations to follow, says Manz. For example, many states do not allow a spouse to be a paid caregiver. Medicaid also regulates compensation for caregivers. Undocumented or incorrect payments could jeopardize your loved one’s chance at qualifying for coverage at a senior living community in the future.
Consider speaking with an experienced attorney who specializes in Medicaid to see what requirements may apply to your situation and in your state.
There are unfortunate instances when a family member can no longer provide full-time care.
Consider these solutions:
American Bar Association. Creating effective agreements for payment of family caregivers: https://www.americanbar.org/groups/law_aging/publications/bifocal/vol_37/issue_3_february2016/creating-effective-caregiver-agreements/
Shepherd Elder Law. Getting paid as a family caregiver through Medicaid: https://shepherdelderlaw.com/getting-paid-as-a-family-caregiver-through-medicaid-2/