Landmines? What are they?
What is the right amount to pay?
Should there be a written agreement?
What about taxes?
Full discloser to all the family?
How will this impact getting Veterans Benefits and Medicaid?
“According to a report by the National Alliance for Care giving and AARP, 43.5 million Americans looked after a friend or relative age 50 or older in 2009, 28% more than in 2004.” [Source: Should You Pay A Relative to Take Care of Mom? by Anne Tergesen, The Wall Street Journal, December 11, 2010.]
If care is required, many families prefer to pay a relative rather than hire a complete stranger. It is only fair to pay someone if they are working part-time or full-time to provide quality care.
What is the right amount to pay? That depends on how many hours, the skill level of the provider and the pay rates in the local area.
Should there be a written agreement? Yes, this will be required if the elder ever should need to apply for Medicaid and the future can’t be predicted. To make sure the legal standards for the agreement meet the Idaho Department of Health and Welfare requirements, contact an attorney who is knowledgeable in this area to assist in drafting this contract. Another advantage of the contract is the terms of employment are spelled out so there are no misunderstandings in the future. If you ignore creating a written agreement and pay the relative caregiver, this will create problems in the future for qualifying for Medicaid.
What about taxes? The provider will pay income tax on the wages received, and the elder may have to pay employer taxes. It is recommended that a Certified Public Accountant be contacted to be certain this is done properly.
Why provide full disclosure to the family? If the other family members are aware of the formal arrangement to provide care for an elder, there is less chance of family disputes about who is being hired and how much they are being paid.
How will this impact getting Veterans Benefits and Medicaid? The Veterans Non-service Connected Pension benefits and the Medicaid rules are complex and are not coordinated. That means you can provide care in a way that works for the Veterans Administration but that may not work to qualify for Medicaid.
So what is the bottom line? To make sure everyone is treated fairly and to get the maximum benefit for the elder, the caregiver and the family, get a written agreement that meets the needs of everyone and also meets the legal requirements for the government benefit programs if they should ever be needed. Paying for the preparation of a “Personal Service Contract” will save lots of heartache and money in the future.
The best attorney to help with the contract is someone who is a “Certified Elder Law Attorney” who practices in this area of the law.
P.S. If you need help with a “Personal Service Contract” or your estate plan contact us through our website (www.graham-lawoffice.com) or call 208-344-0375.