Loud and Clear: A Special Needs Conversation

Caregiver Agreements Can Clarify Family Roles

By Leonard Berg, Esq.

Paying a relative for care of a frail parent or of an adult child or sibling with disabilities is an option that sometimes solves a variety of problems. “Caregiver agreements” can enable an individual with special needs to remain living within the community at the same time that it provides income to the caregiver and helps to avoid family resentments.

In many respects, compensating a family member for their services runs counter to our culture and legal framework. There have traditionally been expectations that such nurturing is a family duty, usually provided by females. And since colonial times, there have been laws on many state books outlining “filial responsibility,” legal liability for the expenses of an indigent parent. For many years, such statutes were seldom enforced, but more recently there have been notable cases in which adult children have been presented with a mother or father’s nursing home bills.

Fair Treatment

Nonetheless, there’s much to be said for the fairness of remunerating someone for the often stressful and exhausting job of caring for someone with disabilities. We no longer live in an agrarian society in which multi-generation homes are the norm. Furthermore, women’s social roles have changed dramatically, and household finances are often dependent on their earning outside income.

I’m not suggesting that a parent be paid for care of a child with disabilities who is under the age of 18. Any efforts to be obtain wages through a special needs trust (SNT) or Medicaid would meet vigorous resistance, likely rendering the SNT invalid and causing the child to become ineligible for government benefits.

On the other hand, if the individual being cared for is a wartime veteran with disabilities, who is homebound and has limited financial resources, such an arrangement can help to obtain additional government assistance. The means-tested Aid and Attendance benefit, which is part of the Veterans Administration’s Improved Pension program, recognizes payments made through caregiver agreements as medical expenses. So having such a contract in place can help to establish the veteran’s eligibility.

Families Differ

There’s often resentment if one of several siblings is assuming the bulk of caregiving responsibility, and paying them a fair wage can go a long way toward defusing family conflict. Especially if the individual has left a job in order to assume these duties, a formal caregiver agreement provides not only income, but credit towards Social Security and—in its recognition of important contributions—a source of self-esteem.

On the downside, there may be disagreements over pay rate. And if the caregiver uses the arrangement as an opportunity to isolate the individual from others, charges of undue influence regarding financial matters may emerge.

Put It in Writing

Be aware that formally defining such a relationship is likely to change family dynamics. The caregiver agreement should be structured as a written employment contract, developed in consultation with a special needs or elder law attorney.

The document should detail the services expected of the caregiver, including their “on duty” hours. By stipulating the boundaries of the caregiver’s authority, a well-drafted agreement can ensure that other family members continue to have easy access to the individual being cared for and information concerning their care.

Salary should be paid upon provision of actual services, since dispersing upfront lump sums is frowned upon by Medicaid. The caregiver will be liable for income taxes and the “employer” must make deductions for Social Security and workers compensation. Arrangements should be included for respite and vacation time, and adequate home owner’s insurance should be in place to cover work-related injury. In the past, I have been successful in structuring agreements through which the caregiver becomes employed by a local home care agency, which simplifies many details for the family.

Families should avoid giving funds to the caregiver that aren’t explicitly covered under the employment agreement. Since such “extras” are likely to be interpreted as gifts, they could complicate the eligibility of the person receiving care for means-tested government benefits.

Caregiver agreements clearly aren’t advisable for all situations, but under the right circumstances, they can avoid family clashes and provide financial relief for a hard-working caregiver.

Posted: January 20th, 2013 | 2 Comments »

2 Responses to “Caregiver Agreements Can Clarify Family Roles”

  1. I agree with Leonard – family caregiver agreements can be very effective and useful planning tools. We use them on an increasing basis in our own practice.

    I did want to offer one note of caution. The piece states that using funds from an SNT to pay a parent for care of a minor child is impermissible and may threaten the protected status of the SNT. That is a result that will vary significantly from state to state. In my state of New York, we regularly secure court approval for compensation for extraordinary care giver services for parents of minors with disabilities. The applications are on notice to the local Medicaid agency and must be substantiated with a showing of need and evidence that the payments will not impact the long term viability of the trust, but it is appropriate and permissible in New York.

  2. In recent years the concept of “family caregivers” is becoming very popular becasue from research it has been proved that family caregivers are much better and effective in compare to professional caregivers.
    More and more training programs are now developing for providing care training to family members of an elderly or child.

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