Each year, millions of Americans care for ill or aging relatives, without being paid. Even so, many use their own money to cover caregiving costs. These reports show that more than 40% of family caregivers spend at least $5,000 on these expenses. Roughly 25% report spending $10,000 or more, and 15% spend $20,000 or more annually.
Now, with some parts of the country just starting to take the first, tentative steps towards post-pandemic life and others still in lockdown that begs a question. Can unpaid family caregivers, whose annual contributions are worth billions, be compensated? The answer is yes, but it is important to speak with an elder law attorney about being paid the right way.
Let us explain further. According to the AARP, there are a few scenarios in which you may be paid as a family caregiver. Specifically, you may be compensated if the person for whom you are providing care:
- Is on Medicaid and/or enrolled in certain programs
- Is a U.S. military veteran and/or enrolls in certain programs
- Has the legal capacity and financial means to pay you directly
- Has long-term care insurance that allows him or her to pay you
While this is not an exhaustive list, it can help you start to think about the circumstances under which you can be paid. The key is to not take any steps that could be seen as a misuse of the Older American’s money or perceived as a gift. Often, we see families run into problems because they attempted a “do it yourself” approach and did not understand the legal requirements in this situation.
Having said that, there are a few things to be aware of if you and your loved one wish to create a formal family caregiver agreement. Let us share a couple of these important steps here:
- Be sure to have an attorney draft a personal care agreement detailing services provided and payment terms
- Keep all the necessary parties involved and updated on what is going on
- Document all services provided and payment received
- Talk to an accountant, as well as your attorney, about possible ramifications on both sides of the agreement as you may need to report income received as a salary and complete other tax forms
The last bullet point merits additional explanation. This is because failure to report any wages you receive as a family caregiver may have unintended consequences. This could happen if your relative becomes eligible for Medicaid in the future and you have not paid taxes on relevant income. Medicaid will then regard the money as a gift, not an expense. Ultimately this could keep your family member from qualifying for Medicaid.
If you are a family caregiver and you are interested in learning more about being paid, we are here to help. Simply contact our law firm to schedule a virtual consultation with our legal team today, or at any point in the future.