The idea of a caregiver contract may seem unfamiliar or even alien at first to those who step up to provide care for their loved one or parent who has become disabled. Many feel like when your loved one gets hurt, it’s simply your responsibility to help them out without compensation. Unfortunately, this can tear relationships apart and result in severe financial problems for the caregiver who may not be able to effectively perform their normal work duties.
As a result, more people every day are starting to enter into caregiver contracts, personal care agreements or personal service agreements to help the situation. Learn how important the growing trend of caregiver contracts can be to your Medicaid planning, financial status, and your family relationships.
Caregiver Contracts and Medicaid Planning
Caregiver contracts can be a vital part of your Medicaid planning. They can help to spend down savings, and allow the elder to qualify for long-term Medicaid coverage. This can, in the end, create a better overall financial situation, and improve medical benefits that might be sorely needed, depending on the condition you’re addressing.
Just be sure that, when drafting your contract, you keep a number of important factors in mind. These include your duties, the payment you’ll receive (and taxes you need to pay), and other sources of payment that might be available.
Your Duties as Caregiver
The contract should carefully outline the duties you are to perform. All duties should be covered in exact detail. If going to the grocery store is part of your duties, that should be included. If you’ll help to pay the bills, that’s in the contract. If you have medical responsibilities, make sure they’re spelled out. This is a contract, and all eventualities should be covered — even ones that might be needed in the future but aren’t currently required.
Remuneration for Services
This is a fancy way of saying, “outline the payment you’ll receive.” Make sure that you not only include the rate of pay, but whether it’ll be a lump sum or in regular installment payments. Make sure that the pay isn’t excessive because that could cause a flag when it comes to determining Medicaid eligibility. Research what other caregivers make and keep your pay in that general neighborhood.
Also, keep in mind that you will have to pay income tax on the payment you receive. Be sure to account for that money at tax time. Your accountant or attorney should be able to advise you on the paperwork you’ll need for that.
Grants and Payment Sources
It’s possible that when you set a reasonable payment rate, the elder may not have the funds to pay it. You may in this situation be able to tap into a long-term insurance policy which might provide caregiver coverage. There could also be federal and state grants that you can tap into. Research the resources you’ve got available to help.
Your Elder Law Attorney
A contract is a legal, binding document. It’s important to have the right advice, help and guidance in putting one together. Contact a local and experienced elder law attorney for assistance with these and all of the other issues that may come up with caregiver contracts and Medicaid planning. If you’re in Ohio and need help, give the attorneys at Stano Law a call to get started today.