Today’s Q&A on deals with compensation for family caregivers

Question:  I have been taking care of my Mother since 2004. She has Alzheimer’s Disease. I do not currently have a job because I am with her 24 hours a day. Is there any compensation that I could receive for all my time and effort?

Answer:  We certainly recognize the value of the time you have put in to taking care of your mother in the years since 2004.   While your devotion to your mother is admirable, there unfortunately is no way for you to receive compensation for the time and effort you put in the past.  In the elder care context, there are two (2) scenarios that come to mind where is it wise for the senior to make ongoing payments to the caregiving family member and for those payments to be thoroughly documented. 

One situation is in the context of an application for Medicaid benefits under Title IX.   Under current Medicaid law, when an application is made to the state benefit that agency is obligated to scrutinize the applicant’s financial history over the previous five (5) years.  When money has been transferred from the senior to a family member, the benefit agencies will have a default assumption that the transfers were uncompensated, meaning the senior did not receive fair market value in return.  If that was the case, there may be a Medicaid denial or a burdensome “penalty period” during which the agency will not pay for the urgently needed benefits.  In contrast, if it can be demonstrated the senior was in fact paying the family member for providing urgently needed care, then the payments were not gifts and there is no problem with Medicaid eligibility.  That can be a way for the caregiver to be paid for their time and efforts in providing for their senior loved one.  In this context, payments to the family member can partially be thought of as a “defensive” tactic, to ensure that payments to the family member do not create Medicaid eligibility problems down the road. 

When the senior is to make payments to the family member caregiver for care to be provided, it is crucial that the arrangement be formally documented.  A document commonly referred to as a “Care Contract” should be prepared and it should spell out all the duties and responsibilities of the caregiver and the amount and terms of the compensation by the senior.  While the senior and family members quite understandably are used to dealing with each other in a thoroughly informal manner, it is crucial for them to keep in mind a central goal to document the caregiver / care recipient relationship in a manner that will withstand third party scrutiny by the state’s Medicaid agency or other similar third parties.  Thus, it is well worth the investment for the family to consult a competent elder law attorney to work with the family to draft the document. 

The other situation is when the senior is eligible and applies for benefits through the United States Department of Veterans Affairs (VA).  When the VA pays non-service connected benefits to a living veteran or to the living widow or widower of a deceased veteran, that benefit is structured as a reimbursement for recurring medical expenses.  When properly documented, payments to a family caregiver will be accepted as recurring medical expense for which a reimbursement may be paid, just like reimbursement for health insurance premiums or similar.  So, in that situation the benefit recipient can receive a greater benefit amount and effectively the caregiver is compensated for his or her time.

Henry C. Weatherby, Esq., CLU, ChFC, CEBS
Weatherby & Associates, PC
Bloomfield, Connecticut
Member of the ElderCare Matters Panel of Experts

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