There are several kinds of Caregivers.
You could be caring for your elder spouse; you could be caring long distance; you could be caring for your own children and your parent (the Sandwich Generation) or you could be working and also a caregiver. Each has unique challenges. Is there a chance you can get paid for your services? Getting paid and not destroying Medicaid eligibility is tricky.
Some statistics say over 70 million family caregivers work hard for free. To get paid from private funds, long-term care insurance benefits, or a state-sponsored assistance program you need a written agreement. If the person you are caring for ever needs to enter a nursing home and wants Medicaid to pay for it, the agreement can show that these payments were legitimate, not just an attempt to "hide" funds in order to qualify for Medicaid's services. Your parents may like the idea of a trusted family member being the caregiver. And hiring a relative can be a money-saving strategy. On the other hand your siblings may not agree. In the absence of a Caregiver agreement, also known as personal-service or personal-care contracts, a parent may decide to bequeath a larger slice of an estate to the primary caregiver, typically one child, which can lead to a serious family breach and legal proceedings.
The Main Rules: The agreement must be in writing. The payment must be for care provided in the future (not for services already performed). Compensation for care must be reasonable. This means it should not be more than what would be paid to a third party for the same care in your state or geographic area. Tasks performed should match "reasonable" or "customary" fees typically charged for those services.
What's in the Agreement?: At the minimum it should describe the services provided like meal preparation, doing the laundry, providing transportation, and assisting the person be cared for with ADL (Activities of daily living like bathing and toileting). The services should be provided on "as needed" basis making clear that the Senior may need to be transferred at some point to an institutional setting. The pay schedule must be reasonable based on hourly charges for similar services in the area. If your just washing clothes don't use the hourly rate of a nurse. (Keep accurate records). Or the payments could be based on a weekly or monthly basis. To have a one time lump sum payment you need an annuity type computation based on the life expectancy of the person being cared for. The agreement terminates with reasonable notice by either party or death of the person being cared for.
Taxes: Assume IRS will call you an "employee" and not an "independent contractor" which triggers withholding. You can ease the burden of this by using a payroll service. Payments under the table are not only illegal they ruin your argument to Medicaid that this was not a gift.
Call : 650.625.7300
The Main Rules: The agreement must be in writing. The payment must be for care provided in the future (not for services already performed). Compensation for care must be reasonable. This means it should not be more than what would be paid to a third party for the same care in your state or geographic area. Tasks performed should match "reasonable" or "customary" fees typically charged for those services.
What's in the Agreement?: At the minimum it should describe the services provided like meal preparation, doing the laundry, providing transportation, and assisting the person be cared for with ADL (Activities of daily living like bathing and toileting). The services should be provided on "as needed" basis making clear that the Senior may need to be transferred at some point to an institutional setting. The pay schedule must be reasonable based on hourly charges for similar services in the area. If your just washing clothes don't use the hourly rate of a nurse. (Keep accurate records). Or the payments could be based on a weekly or monthly basis. To have a one time lump sum payment you need an annuity type computation based on the life expectancy of the person being cared for. The agreement terminates with reasonable notice by either party or death of the person being cared for.
Taxes: Assume IRS will call you an "employee" and not an "independent contractor" which triggers withholding. You can ease the burden of this by using a payroll service. Payments under the table are not only illegal they ruin your argument to Medicaid that this was not a gift.
Call : 650.625.7300