Monday, November 01, 2010
Can family caregivers be paid for their time?
Unpaid family members indeed form a backbone for elder caregving in the United States, and demographics may stretch the demand for paid services to the breaking point, so it is said. Neverthtesll, given the sacrifice involved, it’s appropriate for family members to ask if it is legitimate to be paid for their services.
The general answer is a guarded yes. There are three major potential sources. One would be the elder’s own savings, if they are sufficient. The adult child would need to consult with a lawyer and draw up the necessary powers of attorney and perhaps create a living trust. The adult child(ren) should also consult a tax advisor. It’s also possible in some states to be paid by Medicaid if there are insufficient assets, and some long term care insurance policies are structured to allow family caregivers to be paid about the same rate as home health.
The best document on the topic seems to come from the “geriatric care manager” site here, an article called "Family Caregiver Agreements", from NAPGCM (National Association of Professional Geriatric Care Managers), by Linda Fodrini-Johnson.
There’s a lot here. For example, the reference suggests drawing up a contract. Consider whether free room and board is included. Tax laws generally allow this to immediate family members, but it could be a sensitive matter if the adult child insists and maintaining “independence” (ask a tax professional). In some cases, it may be appropriate to pay room and board (which is taxable to the parent) and be paid for services (which is taxable wage income reportable to the IRS and to social security, included in social security records like wages from any employment). There could be other issues to consider here: If the adult child is receiving unemployment, there could be conflicts (with number of hours worked a week); if the adult child is between 62 and full retirement age and drawing social security, there could be issues with the Annual Earnings Limit. Be careful if estate funds are used if they are likely to be used up, as Medicaid lookback periods and state filial responsibility laws [which generally presume an adult child most prove he or she could “support” a parent and himself or herself if demanded to do so, as if the elder were a conventional dependent] could come into play. And there can be issues about the compensation itself, for example, if there are other siblings or potential heirs sensitive to the estate. If agency caregivers are brought in, the adult child should probably not be paid for services given by the hired caregivers, but could be paid for other work not done by caregivers, such as financial management (bills), medication, property management (repairs), anything that takes time and draws of education or professional skills. (He or she could also be paid for human resources or supervision time if he does not use an agency to provide the caregivers but handles their payroll, withholding tax, immigration I-9, performance appraisals, etc; this is sensitive and can lead to other conflicts). The over all arrangement should be fair (itself a subjective concept because most federal and state laws leave a lot of wiggle room for interpretartion); otherwise there could be risk of being reported for elder abuse or comingling. The appropriateness of compensation can involve other factors, too: whether professional management services are used, and whether hiring agencies are used, both of which account for some time that the adult child might want to be compensated for.
I found several other sources, such as this “Suite 101” here, home care here, and “Caring” here. Generally they assume that the adult child is doing physical personal caregiving as well as management.
Pictures: From Jon Stewart's Washington DC rally.