Many people are willing to voluntarily care for a parent or loved one without any promise of compensation. Even so, a growing number of people are entering into caregiver contracts with their family members. Having such a contract has many benefits. It rewards the family member doing the work. It can help alleviate tension between family members by making sure the work is fairly compensated. In addition, it can be a be a key part of Medi-Cal planning, helping to spend down savings so that the elder might more easily be able to qualify for Medi-Cal long-term care coverage, if necessary.
The following are some things to keep in mind when drafting a caregiver contract:
Meet with an attorney. It is important to get an attorney’s help in drafting the contract, especially if qualifying for Medi-Cal is a goal.
Caregiver’s duties. The contract should set out the caregiver’s duties, which can be anything from driving to doctor’s appointments and attending doctor’s meetings to grocery shopping to help with paying bills. The length of the term of the contract is usually for the elder’s lifetime, so it is important to cover all possibilities, even if they are not currently needed.
Payment. Payment to the caregiver can either be made with a lump-sum payment or in weekly or monthly installments. For Medi-Cal purposes, it is very important that the pay not be excessive. Excessive pay could be viewed as a gift for Medi-Cal eligibility purposes. The pay should be similar to what other caregivers in the area are making, or less. To calculate a lump-sum payment, take the monthly rate and multiply it by the elder’s life expectancy.
Taxes. Keep in mind that there are tax consequences. The caregiver will have to pay taxes on the income he or she receives.
Other sources for payment. If the elder does not have enough money to pay his or her caregiver, there may be other sources of payment. A long-term care insurance policy may cover family caregivers, for example. Also, there may be state or federal government programs that compensate family caregivers.
For more information, please contact the Law Office of Sean D. Ethington at 661-295-4604 or visit our website at www.elderlawsite.com .