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