How do I get paid to care for a family member?
Can I get paid to care for my elderly or sick family member? For many caring for a family member is a selfless act of love. However, that care, while a great service to the family member eats into the caregiver’s time and ability to earn his or her own income. So, as a family caregiver, are you eligible to receive payment?
(*I am an attorney, but I am not your attorney. Nothing in this post constitutes an attorney-client relationship or should be taken as legal advice. The information here is merely for educational and informational purposes. You should always discuss your situation with your own attorney.)
Elderly parents or other disabled family members deserve dedicated care and attention. Who better to provide that care than their loving family members?
However, if mom, dad, aunt, or child need round the clock care, the caregiving family member may be pressed with a very difficult problem: how to support the caregiver.
For more resources for caregivers, check out my resources page here.
RESTRICTIONS AGAINST PAYING FAMILY MEMBERS
If you were to hire a caregiving service, nurse, cleaner, landscaper, or hospice provider, you would never expect them to work for free.
However, if a family member cares for an elderly or disabled family member, then the rules are different. In many states, absent a written agreement, that family member could not receive payment.
In many states, like Indiana, Medicaid sees any payment to family, regardless of whether it is for care or services, as a penalty transfer that can disqualify the patient from his or her Medicaid services.
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Therefore, if your elderly or disabled family member may one day need Medicaid, then payments to family members would ultimately be inappropriate without a contract.
PERSONAL SERVICES CONTRACTS OR CAREGIVING AGREEMENTS
Medicaid may prohibit payments to family members for care; however, Medicaid does not prohibit payments to family members pursuant to a contract.
In other words, if your disabled or elderly family member forms a contract with the caregiver where the patient contracts the caregiver to provide specific services, then the payment is not a penalty and is appropriate under many states’ Medicaid laws.
A caregiver agreement or personal services contract not only creates a paper buffer between the caregiver and Medicaid, it also creates the means for the caregiver to continue to receive an income.
Keep in mind, however, that this caregiving agreement MUST be personalized for the types of services that the caregiver actually provides.
LIMITATIONS ON CAREGIVER AGREEMENTS
Caregiver agreements require certain legal boilerplate provisions to comply with your state’s Medicaid laws. However, they must also be personalized to the care and needs of the patient and caregiver.
If daughter does all of the financial maintenance, grocery shopping, meal prepping, and personal hygiene care, then her caregiver agreement should reflect that.
If, on the other hand, son cares for the home maintenance, the medical records, and nighttime security, then his caregiver agreement should reflect his specific duties and expectations.
Generally, any person or family caregiver who will be providing an ongoing service should have his or her own caregiver agreement.
That caregiver agreement should not only describe the services that each family member is providing but should also outline the compensation rates and limitations.
LIMITATIONS ON PAY UNDER PERSONAL SERVICES AGREEMENTS
Personal services agreements, like most contracts, are bound by reasonableness.
If, for example, mom wishes to contract with her daughter for her care, but she wants to pay daughter $200 per hour, then that contract may still be a violation of your states’ Medicaid laws.
Similarly, if mom wishes to contract with her daughter for her care, but daughter starts claiming that she is providing 24/7 specialized care at $30 per hour, then again, this might not be reasonable under your states’ Medicaid laws. Conceivably, daughter slept, ate, and took a break at some point in that 24 hours.
Therefore, in order to not only receive pay but ensure that your pay is not deemed unreasonable, your caregiver agreement should also establish an hourly rate and a cap on hours and fees.
Generally, your cap on hours and fees should not exceed the family members’ ability to pay.
Many states have statutorily reasonable fees between $20 and $30 per hour.
Therefore, while you may wish to transfer as much of the patient’s money as possible, beware that those payments and transfers will always be subject to a reasonableness inquiry. An inquiry done by Medicaid and even the IRS if the payments become a deemed gift.
RESPONSIBLITIES FOR RECEIPT OF PAYMENT
As a caregiver, you are not only responsible for the care of the patient, but you are also an independent contractor.
Therefore, you are responsible for tracking, explaining, invoicing, and reporting all of your own income.
Income earned pursuant to a caregiver agreement is taxable earned income and should be reported on your personal 1041.
While the personal services agreement can specify when you are to invoice your patient, if it is silent, submit invoices at least monthly.
Further, descriptions of your hours and what services you provided should also be easily accessible by the patient, the patient’s agent, and, ultimately, Medicaid.
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Keep a simple ledger, excel spreadsheet or Caregiver’s Notebook like this one to track your time and activities. Some people even use an app tracker on their phone.
Regardless of the method you choose, treat the caregiving as a job where you would clock in and out and be expected to explain what you did to your boss.
HOW TO RECEIVE PAYMENT FOR CARING FOR A LOVED ONE
In short, yes, you can be paid to provide care for a loved one. However, if you also want to make sure that you do not run afoul of Medicaid, then you must have a personal services contract or caregiver agreement.
Your agreement should be specific and reasonable detailing your responsibilities, your pay, and your limitations.
Finally, you, as the caregiver, must track your work, your time, your expenses, and even your taxes just like you would in any job.
Caring for a loved one can turn into a very time-consuming and difficult job even requiring you to choose between your own career and livelihood and the livelihood of your loved one.
Receiving payment for your work and sacrifice seems only reasonable, but be certain that you comply with your state regulations as well as employment laws.
Find an attorney in your jurisdiction to ask about forming a caregiver agreement for your loved one.