The role of family caregivers
The high value of family caregivers is undeniable.
More than 44 million caregivers in the United States provide care to loved ones in need, according to studies by health care coordinator Evercare and the National Alliance for Caregiving.
Just how busy are those family caregivers?
Thirty-seven percent of caregivers spend more than 40 hours a week providing care to loved ones, which is the equivalent of a full-time job. And another 30 percent spend 20 to 39 hours assisting loved ones in need of care.
One way to compensate an adult child willing to devote so much of his or her time caring for an ailing or aging family member is through a caregiver agreement.
The agreement is essentially an employment contract between the caregiver and the recipient of care, says Michael J. Amoruso, an elder law attorney in Rye Brook, N.Y. A caregiver agreement stipulates a caregiver's tasks, the hours spent caregiving and financial compensation for the family caregiver.
Here are five important ways a caregiver agreement can help your family.
Caregivers get paid for the job they do
Through a caregiver agreement, also known as a personal-care contract or family-care contract, a family caregiver receives financial compensation for the time and effort he or she gives in caring for a parent or elderly relative.
"The No. 1 question we receive in calls and emails is, 'How do I get paid for caring for a family member?'" says Leah Eskenazi, operations manager at The Family Caregiver Alliance. "That's where it's great to have a family care contract. It offers a great way to help support the person providing care."
How much to pay a family caregiver is up to families to decide. Looking at how much a home health agency or other third-party company would charge for providing similar services is a good place to start.
"Sometimes a family member charges a little less," says Joseph Matthews, an attorney and senior editor with Caring.com. "There are no real rules. It's what all family members are comfortable with."
Define caregiving relationship
A recent Evercare survey placed the value of services family caregivers provide for "free" at an estimated $375 billion a year, almost twice as much as the amount spent on home care and nursing home services combined.
A detailed caregiver agreement makes clear the extent of the services being provided by a family caregiver and the amount of money the caregiver is getting paid, Caring.com's Matthews says.
"Everybody knows exactly what the terms are," Matthews says.
Agreeing to a personal-care contract is a good way for the caregiver and care recipient to iron out the terms of the relationship.
"The parent knows what to expect the child to do, and there's a limit," Matthews says. "It sets boundaries."
Keep peace among family members
Having a caregiver agreement in place helps minimize battles between siblings and family members over the handling of an ailing loved one.
"It's a way of alleviating some, but not all, of the conflict among family members about who is doing the caregiving," Matthews says.
Often, an adult child who lives near a parent takes on the role of caregiver.
Other siblings and family members will be able to view the personal-care contract and understand the extent of caregiving being provided as well as the amount being paid by the care recipient.
"The existence of the contract helps elevate the validity of the arrangement," says Howard S. Krooks, vice president of the National Academy of Elder Law Attorneys. "Anybody looking at it will see you did all those things, and that's exactly what mom and dad wanted."
Clear the way for Medicaid
Making payments to a family caregiver without a personal-care contract in place may delay a parent's eligibility for long-term care coverage under Medicaid.
The money a parent pays to a family caregiver, absent an agreement in writing, will be deemed a gift by Medicaid, causing a period of delay where the parent will not qualify for the Medicaid benefit, Krooks says.
At the time of a parent's Medicaid application, Medicaid will total all the payments made to a family caregiver in the past 60 months and divide that total by the average monthly cost of a semi-private room at a nursing home in the state.
The quotient is the penalty period, which equals the number of months Medicaid will not pay for nursing-home care.
Let's say the average cost of a nursing home is $5,000 per month, and a parent pays a family caregiver $30,000 over the course of three years and then applies for Medicaid.
Without a caregiver contract in place, Medicaid could deem those payments as gifts, delaying the parent's Medicaid eligibility by a penalty period of six months. That number of months is determined by dividing $30,000 by $5,000.
Keep care and money in the family
By opting for a family caregiver agreement, much of a loved one's care is provided by a devoted family member.
"Very often, people would be much happier having a family member take care of them than a stranger," Matthews says.
And the money a family would pay to a home health agency for aides to perform similar services would be paid to a family caregiver instead.
"The money the parent pays stays in the family," Matthews says.
Often, a family caregiver may need the financial compensation, especially when committing to a long-term arrangement.
"People who provide care usually are making some kind of sacrifice," Krooks says. "Some have a job, and this is a second job. For some, this is their only job."
Care recipients with long-term care policies may want to check the fine print of their plans.
Some long-term care policies, such as those that pay lump-sum "indemnity" benefits, may be used to pay family members who provide care, according to Jesse Slome, executive director of the American Association for Long-Term Care Insurance.
"The newer policies today offer cash-alternative benefits that would pay for a family member," Slome says.