It's a blessing and a challenge, caring for your elderly parents. The rewards are long-lasting, and in some ways, how can you put a price on family caregiving?
In other ways, there are prices—not just physically and emotionally but practically. You're doing the hard work many are paid to do. And it may be affecting your own finances.
So, can you get paid to care for your elderly parents? Yes—under certain circumstances. But there are important rules to keep in mind. Otherwise, payments to you could end up costing your parents a lot more in the long run.
Option One: Getting Paid by Your Parents
A parent can give you lump-sum gifts or pay you by the hour. Each method has different rules.
For lump-sum gifts:
Be aware of the gift tax. The yearly gift limit is $13,000 ($26,000 per couple) in 2011. As long as you don't give any one person more than that, you don't have to pay a gift tax. You can go over that and not pay a tax, but there's a lifetime limit, and it affects your estate-tax exemption. TurboTax has a good article about this.
Remember Medicaid. If your parent eventually needs Medicaid, the government will look into the lastfive years. If he or she has given away money, Medicaid won't cover nursing-home care for a certain amount of time. This nonpayment period starts only after your parent is in the nursing home, says Michael Amoruso, an elder-law attorney in Rye Brook, New York, and an incoming member of the board of directors for the National Academy of Elder Law Attorneys.
For hourly payments:
Your parent will be considered an employer and must abide by related laws. Amoruso recommends letting a payroll company handle the money and W-2s and help you with insurance.
You need a detailed caregiver contract. This can help prove to Medicaid that the payments were legitimate.
Caregiver payments must not exceed fair market value. If they do, Medicaid, if eventually needed for nursing-home care, will consider the excess a gift and impose a penalty. Check rates with local home-care agencies, Amoruso suggests.
Amoruso also recommends keeping a daily caregiver log specifying what you did and when, including medications dispensed. Medicaid doesn't require it, he says, but without it, "they're going to look at the arrangement between parent and child with a high degree of skepticism since there is a federal presumption that care rendered by a loved one is performed solely for love and affection and not compensation."
You should also be able to show Medicaid that your parent needed the care, he says. His office does this by having a geriatric-care manager make care recommendations at the beginning—and yearly, if needed.
For the caregiver contract, eldercare expert Barbara McVicker, author of Stuck in the Middle: Shared Stories and Tips for Caregiving Your Elderly Parents, advises including details such as what the tasks will be, when they'll be performed, and how much payment will be. Amoruso advises having an attorney write the contract.
Option 2: Getting Paid by the State Government
Many states now have programs that allow seniors to pay family caregivers. Some programs are part of Medicaid and thus limited to seniors with low financial resources.
The most well-known is Cash & Counseling, available in 15 states. Payments through these programs aren't usually a lot, says Elizabeth Maguire, spokeswoman for the National Resource Center for Participant-Directed Services, an organization that helps states develop them. In addition to participant-directed, such programs also called consumer-directed and self-directed, she says.
To find out what your state offers, Maguire recommends contacting your local Medicaid office or Area Agency on Aging.
Other Ways to Get Paid
If your parent has long-term-care insurance, check to see whether it will cover caregiver services from an adult child. "They often pay the patient, who can then hire anyone," McVicker says.
The Family Caregiver Alliance notes on their website that disease-specific organizations may also provide caregivers financial help.
Why It's Good to Get Paid as a Family Caregiver
"I believe that all primary caregivers should be reimbursed in some way," McVicker says. That may come in the form or flowers, respite care, or someone taking over for a week. "But boy, if you give them a monetary kind of thing, that shows that what they've done has some value and is appreciated."
For free information about senior living communities in your area, call (877) 917-0579 to speak to your local Care Advisor.
Leigh Ann Otte is a freelance writer who covers finding and paying for senior care for OurParents.