The most recent figures show that 48.9 million people in the U.S. have served as adult caregivers, with 86% of them providing for a relative in need. Not only do these people have to contend with the myriad difficult and thankless tasks associated with caregiving, but most also have to work outside jobs in order to pay the bills. In all, more than 70% of caregivers effectively work two jobs.
As you might expect, that burden ultimately proves unsustainable for many, as nearly one-third of working caregivers choose early retirement, take a leave of absence from their job, or give up working entirely. What’s more, two-thirds adjust their work hours or take time off in order to provide care.
So, while caregiving is obviously important work, it can have a decidedly negative effect on your paycheck. That’s why 15%of caregivers have reported a “high degree” of financial hardship.
What, then, is a caregiver to do?
Well, the trick is to figure out a way to get paid as a family caregiver without ultimately jeopardizing your loved one’s future Medicaid eligibility. Medicaid agents can choose to conduct a “five-year look back” to determine eligibility, and cash given to caregivers can be considered a gift that must be paid back before Medicaid will kick in.
This is something that I know a bit about, having provided care to my mother for years until her condition made it unsafe for her to live in our home. Mom had sold her home in California when she came to live nearer to us, so she had some financial resources available. But her care was a more than full-time job that prevented me from otherwise working outside of the home.
It was a quandary: She had the means to pay me for the care, which would solve both of our problems, but I didn’t want to jeopardize her eligibility for Medicaid.
So, I worked with a Geriatric Care Manager (GCM) to determine whether there might be a way around the Medicaid eligibility issue. He didn’t make any promises (and I won’t either), but the steps we took have thus far prevented Mom’s care payments from affecting her Medicaid eligibility.
Here’s how we went about things:
At our GCM’s behest, we hired an elder-law attorney – someone well-versed in legal issues common to senior citizens. You can find one in your area by asking your GCM for a recommendation or visiting the National Academy of Elder Law Attorneys, Inc., and clicking the “Find an Attorney” button. Keep in mind that it’s best if your GCM has a professional relationship with your attorney because they’ll likely be working closely together.
Once we selected an attorney, he contacted our GCM with two requests: 1) an assessment of the care my mother would require in our home, and 2) a survey of what that care would cost if provided by a local agency.
The attorney then utilized the care assessment to develop a service contract. This was a four-page document that set forth the:
Parties involved: Names of the caregiver and care recipient
Purpose of the agreement: Determining the “terms and conditions” under which the care recipient’s care, room, and board would be provided
Services to be performed by the employee: How the caregiver would provide for the care recipient’s Activities of Daily Living, meals, materials/supplies, and transportation
Hours of work and schedule: 24 hours/day, unless during respite care periods
Incompetence of Employer: Necessity of working with the care recipient’s Durable Power of Attorney for financial decisions and her Health Care Proxy for health-care decisions, should the care recipient become unable to handle her personal or financial affairs
Compensation: Hourly rate of pay, consistent with the home-care agency hourly rate as determined in our GCM’s survey
Termination of Contract: Either party could terminate during a cancellation period of “ninety days from the date of signing this agreement,” or with 90 days notice.
Governing law, entirety of agreement and partial invalidity: the agreement was governed by the laws of our state.
This was half of what my mother required to keep Medicaid from thinking that her payments to me were gifts rather than compensation for services.
Once the service contract was in place and signed, we chose a payroll company to manage the payments and to ensure that I would receive a W2. I would not recommend the agency we chose because they messed up everything they possibly could. If you can afford it, I’d recommend hiring an accountant for at least the first few months of your agreement to make sure the payroll company is handling withholding, Social Security, and other payments properly.
This service contract helped our caregiving relationship in a couple of ways. First, it gave me peace of mind that our working relationship was documented in such a way that it would be obvious to anyone that I was serving as my mother’s employee. While there have been few consistencies within the Medicaid-application process, I have felt confident that my mother and I did everything within our power to define the checks she paid me as compensation rather than gifts. Additionally, it helped my mother to know that I was contractually obligated to meet her care, room, and board requirements. As her mind started to slip, it was helpful to have a contract I could refer to when she became anxious about her future care.
Again: I cannot promise that if you follow this, you won’t have problems with Medicaid down the road. I can only tell you that it does not seem to have caused any problems with our own five-year look back process with Medicaid.