Today it is more and more common to see family members caring for aging parents. Inevitably this work of charity can lead to loss of income and burgeoning expenses for the caregiver. Thus, replacement sources of income have become a major concern for many.
One common assumption among family members is that they can automatically be paid for the care they provide if the family so chooses. Nevertheless, this assumption is often faulty when the situation is reviewed in the context of receipt of government benefits such as Medicaid and Veterans Benefits.
Under Medicaid law family members who provide care are considered to have done it for “love and affection” and hence, for no compensation. Imagine the shock of a family member that, upon admitting a parent to a nursing home, finds that the many thousands of dollars that the parent transferred to the caregiver child for years of care have to be returned; and if not, the parent is denied medical coverage.
Fortunately, there are provisions in the law that permit the caregiver child to be paid under certain circumstances. For example, Medicaid permits a “personal services” contract to be done whereby the child can be paid for caring for the parent. The child can be paid a “reasonable” amount – which is usually comparable to what it would cost to get custodial care from a professional. This can add up to many thousands of dollars over time. The benefit of such a contract is that it permits the family assets to remain in the family instead of having to spend them down as a part of Medicaid requirements. However, families desiring to enter into such a contract should seek legal counsel to make sure that the very specific requirements of the law are met; otherwise, the assets will have to be returned.
The Veterans Administration also permits a caregiver child to be paid. This occurs in the context of the “Aid and Attendance” benefit. The caregiver child must submit the contract for VA review, and if approved, it is considered a legitimate medical expense and can help the veteran (or surviving spouse) qualify for even more monthly pension funds from the VA.
At Heritage Elder Law & Planning we are trained to help families in properly drafting and executing family caregiving plans. Call us for a free consultation.