Any adult who is considering becoming the sole caretaker of an elderly or disabled parent or other family member should seriously consider drafting a caregiver contract. Also called personal care or personal service agreements, caregiver contracts are agreements that specify the designated caregiver, his or her duties and compensation. Creating a caregiver contract is step toward avoiding conflict among family members and rewarding caregivers for their time and effort.
Caregiver contracts should be drafted with the assistance of attorney, especially if Medicaid planning is an objective. Such contracts can reduce a person’s estate and help him spend down resources in order to qualify for Medicaid. The length of the contract term is typically for the lifetime of the person receiving care. The term may even continue after the individual enters a nursing home. In this case, the caregiver becomes his or her advocate to ensure he receives the care he or she needs.
Compensation should be similar to, or less than, what caregivers in your area currently earn. Compensation is taxable, so a caregiver will have to pay taxes on his or her earnings. If the person receiving care does not have sufficient financial resources to pay a caregiver, they can consider purchasing a long-term insurance policy that covers caregivers or look into federal or state programs that compensate caregivers. Check with your local Agency on Aging for more information.
