Pay Your Family Member to be Your Caregiver

Orange City Iowa Estate Planning

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Caregiving for a family member can be time-consuming and emotionally draining. It can be financially draining, too.

AARP’s recent article entitled “Can I Get Paid to Be a Caregiver for a Family Member?” says that your chances of getting paid to be a family caregiver are best if you are caring for a veteran or for someone eligible for Medicaid, but there are other possibilities.

Every state and the District of Columbia have self-directed Medicaid services for long-term care. These programs permit to states grant waivers that allow qualified individuals to manage their own long-term home-care services, rather than using the traditional model where services are managed by an agency. In some states, you can hire a family member to provide care. The benefits, coverage, eligibility, and rules are state-specific.

Here’s how you can enroll in self-directed care:

  1. Assessment. Your family member is first assessed for capacities, need, preferences, risks and strength, as required by the Centers for Medicare & Medicaid Services.
  2. Planning. Your family member and any chosen representatives will draft a written service plan describing the required daily living assistance. This may include needs, such as bathing, dressing, feeding, assisting with light housekeeping and laundry, managing prescriptions, moving from bed to wheelchair, meal prep, shopping, supervising activities and transporting to doctor’s appointments. There should also be contingency planning in case coverage is needed when the care provider is not available.
  3. Budgeting. If the assessment shows need, a budget for goods and services will be created.
  4. Selection. When the care plan is ready, the care recipient (or a surrogate) selects a caregiver.

Getting Paid By A Family Member

If the senior requiring assistance is mentally sound and has enough financial resources, he or she can opt to compensate a family member for the same services that a professional home health care worker would provide. If you and your loved one are looking at this, consider these actions to create a proactive employer-employee approach, which can lessen stress and family tension:

  • Discuss the awkward stuff. Talk about what you both need like pay, scheduling, time off and caregiver sick days.
  • Create a personal care agreement. This will be the contract between the caregiver and the care recipient, detailing things like wages, services to be provided, the length of the agreement and other important topics. You can involve other family members in working out terms. That way, no one is taken by surprise later.
  • Talk to an elder law / care lawyer. Let him or her review your personal care agreement to be sure it meets tax requirements and discusses inheritances. Make certain that all other interested parties, such as siblings, approve it.
  • Watch out for emotional pitfalls. If family members are uncomfortable with the arrangement or don’t like the plan, perhaps have a meeting with a neutral party.
  • Maintain records. Document the services performed, dates of work and the amount paid. These records are vital, if your senior member later wants to apply for Medicaid. In the qualification process, a caseworker will review records for the past five years.
  • Report your income. Caregivers must report their wages as taxable income. If at a later time your family member becomes eligible for Medicaid—but your taxes haven’t been paid—Medicaid will look at the money as a gift and not as an expense. This could keep your parent from qualifying for Medicaid.

Reference: AARP (May 15, 2020) “Can I Get Paid to Be a Caregiver for a Family Member?”

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