Caregiver Contracts are a Growing Trend

Nearly 44 million adult caregivers (21 percent of the U.S. adult population) provide care to seniors or adults with disabilities. On average, these caregivers provide 21 hours of care a week; and the average length of time spent providing care is 4.3 years (source: AARP).

Many caregivers have to balance their family duties with their real jobs. Nearly 60 percent of caregivers either work or have worked while providing care, the study found, with many having to make adjustments to their work life, including giving up their jobs entirely.

Even though most family members want to help and feel a sense of duty to care for a loved one, it is a job with heavy time commitments and responsibilities. One way of protecting the caregiver, as well as the person receiving care (and legally protect assets in the process), is by having the care recipient pay the caregiver pursuant to a written agreement. A growing number of people are entering into such caregiver contracts (also called personal service or personal care agreements) with their family members.

A caregiver contract is most commonly between an adult child or and his/her parent, but other relatives may be involved, such as an adult grandchild caring for a grandparent. It can offer family caregivers security that they will not suffer undue financial consequences. At the same time, the agreement can also offer the care recipient peace of mind that she or he has a caring advocate to manage care needs.

Drawing up an agreement clarifies for a family what tasks are expected in return for a stated compensation. These agreements can help avoid family conflicts about who will provide care and how much money will change hands. For this reason, the agreement should be discussed with other family members to resolve any concerns before an agreement is finalized.

A caregiver contract must be in writing and should include the following:

  • Date the care begins.
  • The caregiver’s duties.
  • The length of the contact.
  • During what hours services will be provided.
  • The location where services are to be provided – the home of the care recipient or home of the caregiver.   In the event of the latter, then there may also be a payment for room and board incorporated into the agreement.
  • Payment details for care provided in the future (not for services already performed).
  • Compensation for care must be reasonable. This means it should not be more than what would be paid to a third party for the same care in your state or geographic area. Tasks performed should match “reasonable” or “customary” fees typically charged for those services.
  • When and how the caregiver will be compensated (weekly or twice a month).
  • A statement that the terms of the agreement can be modified only by mutual agreement of the parties in writing.
  • Other sources of payment. If the elder does not have enough money to pay his or her caregiver (or wants to save on the expenses by tapping into available benefits), there may be other sources of payment, such as the Veterans Aid and Attendance Special Pension Benefit, which allows a family member to be the paid caregiver. Some long-term care insurance policies cover family caregivers, but usually the family caregiver must be a licensed health care professional. Also, Medicaid can sometimes compensate family caregivers, but the caregiver must typically be a licensed home health-care professional working with a Medicaid-approved agency.
  • Taxes. Keep in mind that there are tax consequences. The caregiver will have to pay taxes on the income he or she receives.

Keep in mind that a Caregiver Contract can be a key part of Medicaid and VetAt the Fairfax and Fredericksburg Elder Law Firm of Evan H. Farr, P.C., we recognize that caring for a loved one strains even the most resilient people. If you’re a caregiver, take steps to preserve your own health and well-being.  Part of taking care of yourself is planning for your future and for your loved ones. Please call us at our Virginia Elder Law Fairfax office at 703-691-1888 or at our Virginia Elder Law Fredericksburg office at 540-479-1435 to make an appointment for a no-cost consultation.erans Asset Protection planning. Therefore, when contemplating entering into a caregiver contract, be sure to use an experienced Elder Law Firm such as our firm to draft the contract, especially if qualifying for Medicaid is a goal.

P.S. During this month, which is National Family Caregiver’s Month, and this week, in which we celebrate Thanksgiving, we want to extend our gratitude to all caregivers. Thank you for your hard work and commitment to caring for your loved ones.

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About Evan H Farr, CELA, CAP

Evan H. Farr is a 4-time Best-Selling author in the field of Elder Law and Estate Planning. In addition to being one of approximately 500 Certified Elder Law Attorneys in the Country, Evan is one of approximately 100 members of the Council of Advanced Practitioners of the National Academy of Elder Law Attorneys and is a Charter Member of the Academy of Special Needs Planners.

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