Oftentimes, it is a family member who provides the care for an elderly relative. In fact, family members are more likely to help to defray the costs of home health care in the United States than any other source. This is extremely difficult and usually comes with a cost to their own physical, mental and financial well-being.
It has been found that many of these caregivers will give up employment opportunities to meet the needs of their family, knowing that they have an emotional tie to the elderly relative. It only makes sense that these people should be compensated for this sacrifice. This can come in the way of a place to stay or a monetary agreement. However, there are legal issues involved with such a compensation that should be considered.
As with any form of income, there are taxes to be reported on money or room and board. What is the value of the service and how much should be reported. If the individual or the person being given the care is doing their own taxes, this can be a tricky situation. It is best to consult a tax professional.
Consider having a contract written up for the services provided. This may seem odd, since it is most likely the child or a close relative doing the caregiving, but it becomes apparent once a Medicaid application is made. The agency which runs Medicaid (The Department of Human Services) will consider any form of compensation as a gift and not a salary. Because of this, the elderly patient may be disqualified from receiving Medicaid. If a contract is written to show there is a business arrangement, the government agency will then have proof such an arrangement is in place. You will want to consult with an elder law attorney as to what would be considered a fair compensation for services.
If the older patient is currently on Medicaid, then Medicaid may end up paying the family member for their service. To do this, the family member must be approved as a qualified family provider. This includes the use of the family home to the caregiver without a penalty, but there are restrictions on how the care must be offered. This is a bit more complex and will require information from your elder law attorney to make sure everything is in order.
While having a family member care for an older loved one can save the family thousands of dollars in care costs, it is important to remember the legal issues that can quickly become involved. It is not simply a matter of one child saying, “I’ll do it.” Take precautions and learn the laws so everything can go smoothly.
For more information, please contact the Kabb Law Firm at 216.991.KABB (5222) to set up an appointment.