Family Caregivers & Compensation
Are you caring for a loved one in your home? Often, we see family members who have made sacrifices to care for an elderly relative, such as reducing work hours or leaving a job, changing social activities, or making physical modifications to their home. Sometimes, the one being cared for wants to express their appreciation and either “pays” the caregiver directly, or contributes to the cost of running the home. Other times, the arrangement would be impossible without some compensation to the caregiver by the relative due to the limited resources of one or both parties. Without a formal written agreement, the sharing of resources between the caregiver and the recipient of care could create a problem down the road if nursing home care is required.
The problem that is created is called “gifting”. Money or property that changed hands between the caregiver and recipient of care is closely looked at by the Department of Public Welfare (DPW) if the person needing care applies for public benefits to help pay for nursing home care later on. Although many people would view this sharing of resources as reasonable and fair, the law requires specific documentation in order to prove that assets were not “given away” just so someone could qualify for benefits. The DPW has a five year look back period, specifically for amounts totaling more than $500 in any one month.
The gifting problem can be prevented, and compensation for care given, with a Family Caregiver Agreement (also known as a Personal Service Contract). This document is an agreement between a senior and one or more persons to provide care and/or housing for a senior for a specified term, which could be the remainder of their life. It contains specific information about accommodations, meals, physical care (both medical and personal tasks), financial management, cleaning, laundry, and transportation for the senior; as well as payment for the caregiver.
Family Caregiver Agreements contain certain elements to ensure their validity. The agreement must be in writing and state the purpose of financial reimbursement for provision of care. The details of the care for each area (listed in the paragraph above), should be specific. All parties involved must be included in the agreement, and the amount of financial compensation being paid must be at fair market value. (To determine fair market value, visit the PA Dept. of Labor & Industry at www.dli.state.pa.us.) A payment schedule should be established (weekly, monthly, or lump sum). In addition, caregivers will need to remember to include the payments that they receive on their personal income tax return.
Would a Family Caregiver Agreement be appropriate for your situation? A consult with one of our attorneys may provide some helpful insights about options for current and future care for your loved one. For additional information about “gifting” as mentioned above, please view the practice area for “Medicaid Planning.”
For additional information or questions, give us a call at 717-697-3223
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REGISTER HERE for LONG-TERM CARE PLANNINGPower of Attorney
A Power of Attorney can be used to give another person the right to sell a car, home, or other property in the place of the maker of the Power of Attorney. A Power of Attorney might be used to allow another person to sign a contract for the maker of the Power of Attorney (the person who makes a power of attorney is called the “principal”). It can be used to give another person the authority to make health care decisions, do financial transactions, or sign legal documents that the principal cannot do for one reason or another. With few exceptions, Powers of Attorney can give others the right to do any legal acts that the makers of the Powers of Attorney could do them themselves. A General Power of Attorney gives the “power of attorney Agent” or simply “Agent” (the legal name of the person who is authorized to act for the principal) very broad powers to do almost every legal act that the principal can do. When Elder Law Attorneys draft general Powers of Attorney, they still list the types of things the Agent can do but these powers are very broad. People often do general Powers of Attorney to plan ahead for the day when they may not be able to take care of things themselves. By doing the General Power of Attorney, they designate someone who can do these things for them.
Normal Powers of Attorney terminate if and when the principal becomes incompetent. Yet many people do Powers of Attorney for the sole purpose of designating someone else to act for them if they cannot act for themselves. It is precisely when persons can no longer do for themselves that a Power of Attorney is most valuable. To remedy this inconsistency, the law created a Durable Power of Attorney that remains effective even if a person becomes incompetent. The only thing that distinguishes a Durable Power of Attorney from a regular Power of Attorney is special wording that states that the power survives the principal’s incapacity. Even a Durable Power of Attorney, however, may be terminated under certain circumstances if court proceedings are filed. Most Powers of Attorney done today are durable.
Yes. At the time the Power of Attorney is signed, the principal must be capable of understanding the document. Although a Power of Attorney is still valid if and when a person becomes incompetent, the principal must understand what he or she is signing at the moment of execution. That means a person can be suffering from dementia or Alzheimer’s Disease or be otherwise incompetent sometimes but as long as they have a lucid moment and are competent at the moment they sign the Power of Attorney, it is valid even if they do not remember signing it at a later date. At the time it is signed, the principal must know what the Power of Attorney does, whom they are giving the Power of Attorney to, and what property may be affected by the Power of Attorney.
Any competent person eighteen years of age and older can serve as an agent. Certain financial institutions can also serve. There is no course of education that agent must complete or any test that Agent must pass. Because a Power of Attorney is such a potentially powerful document, agents should be chosen for reliability and trustworthiness. In the wrong hands, a Power of Attorney can be a license to steal. It can be a big responsibility to serve as an agent.
For Medicaid
Medicare is health insurance and covers medical services such as physician appointments, therapy, blood tests, x rays, medical procedures and hospitalization. Medicare will sometime pay for rehabilitation in a long-term care facility for a period of 20 to 100 days, but not longer. In long-term care, Medicaid covers the cost of ongoing support services for daily functioning, such as room and board in a nursing home.
Medicaid is a federal program that is overseen by the Center for Medicare and Medicaid Services (CMS). In Pennsylvania, Medicaid is called Medical Assistance and is administered by the Department of Human Services (DHS).
In Pennsylvania, Medicaid funds are not available to pay for assisted living or personal care.
For Medicaid to pay for care in a nursing home, an individual recipient must be determined to need a nursing home level of care by a physician and the local Office of Aging. An individual whose income is not greater than three times the poverty level may keep up to $8,000 of total resources, but may otherwise keep only $2,400. The cash value of life insurance counts as a resource, but one car and a residential home does not count as a resource.
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Keystone Elder Law
At Keystone Elder Law, we believe that the physical, social, legal, and financial considerations of our clients all intertwine. We utilize an interdisciplinary approach to evaluate each area, which allows for the creation of a plan that addresses the concerns of the individual as a whole as well as the family. To this end, our model of practice includes a Care Coordinator (usually a nurse or social worker), whose expertise complements our team of attorneys.
When the road of life is smooth, decisions about legal and financial matters are easy to push aside for “a rainy day.” Planning ahead, however, will allow for more options as you view the map of where you’ve been and where you want to go. Don’t let a crisis limit your choices or derail your plans.
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