Sally may sound like someone familiar. She had to take an early retirement from her office position. She would have preferred to have continued working, but had other obligations. Instead of working eight hours in a cubicle, taking care of her parents occupies her time. Her schedule consists of taking her parents to various doctor appointments, managing their medications and ensuring they are eating properly. This is in addition to the responsibilities of her own family. Besides taking care of her mom and dad, she also is maintaining her own household, children and husband.
Sally’s story is more common these days. More and more, adult children are taking care of their parents, whose health has became an issue. Mom and dad aren’t ready for a nursing home, but they need extra help at home. One or all of the children take on the role of full time nurse and caretaker.
Caretakers need to know that it doesn’t have to be this way. Caretakers can be compensated for their time with a legal document called a Personal Services Contract (PSC). The presumption has often been that any family member providing care is doing so free and any payment is a gift. Many people have been raised with the assumption that as their parents grow older and need more care, it will eventually become their full time responsibility and don’t expect to receive compensation.
That’s not the case with a PSC. A PSC, or caregiver agreement is a contract written by an elder law attorney. The contract states that the parent is considered the employer and the designated caregiver is an employee. In the contract the employee’s duties are outlined, along with the hourly fee.
The log is the part of the contract that often gets overlooked. The caregiver must document what services were performed, the length of time and how much income was earned each week. Why is this important? If in the future Medicaid becomes a factor, the contract has to be submitted by the applicant. If the log is completed correctly, Medicaid will not consider the money given to the caregiver as a gift and the applicant will not be penalized. A PSC needs to be in place before services are rendered. This is important to keep in mind. Money paid out before a proper PSC is created could be viewed as an improper transfer of assets.
PSC’s offer a number of advantages and can play a crucial role in effective planning. First, they’re an excellent way to keep your assets working for you and help to reduce or eliminate Medicaid penalties. Second, they offer a way for the recipient to receive additional care that wouldn’t be covered by Medicaid and is outside of the scope of the services that long term care or home health can provide. Finally, they supply a way for a parent to give financial assistance to their family member that they have earned.
Caring for a loved one is hard and stressful. Many people admit that they often feel as if they have two jobs. They have their full time job during the day and the full time hours of a caregiver as well. Some people don’t have the ability to retire early like Sally. They must continue to juggle their career along with taking care of their parents. In our fast paced society, time is money. Most of these people are giving up their time and potential income. This is why it’s extremely important to talk with an attorney that is well versed in elder law and caretaker agreements. This should happen before any contracts are signed or payments are made.
This article does not presume legal advice in any way. This is to present the consumer information for the complicated world of long term care and financial strategies. It is best to consult an elder law attorney who can properly advise and assist with the necessary legal documents.