Scott & Huff, P.C.

1000 S. Garfield Ave.
Suite 3
Traverse City, MI 49686
(231) 933-5322



Family Caregiver Agreements

By: Diane Kuhn Huff

 

Question:  I'm the primary caregiver for my mom.  I'm working less to take care of my mom.  Can my mom pay me for her care?  If not, then I'll have to place her in a facility because I cannot afford to take care of her.

Caring for an elderly parent takes time and lots of loving patience.  Sometimes the elderly person won't accept help from anyone except family. The care also takes a toll on the caregiver, financially through the inability to seek outside employment, emotionally when seeing the parent decline and, physically from the accumulated worries and physical demands. 

One solution to ease the financial burden is to pay the family member caregiver.  Privately paying for a caregiver, housekeeper, cook, transporter, handyman, yardman, and bookkeeper can be expensive.  Since the family is providing the service, and saving the parent money, why can't the elderly person pay family?  They can. Future problems and misunderstandings can be avoided with open communication and documented needs.

Two issues can arise when paying a family caregiver.  First, if the elderly person later needs Medicaid for skilled care or at home care, payments to the family may cause a Medicaid penalty.  Second, family dynamics may change causing suspicion or resentment by the caregiver child, or child not receiving payment.

The first issue is easier to address. Michigan Medicaid rules and case law presume care from family is provided for love and affection. However, the Medicaid rules also list items to rebut the presumption and demonstrate that the caregiver agreement is, in fact, a business arrangement.  To work, there must be a written agreement signed before services are provided.  The contract must be dated, signed and notarized.  The elderly person cannot be residing in a facility. The doctor must state, in writing, that the services are necessary to prevent placement in a facility.  Payment for companionship is not allowed.  Payment may be similar to charges from private agencies. The caregiver cannot sign the contract on behalf of the elderly person.  Payment cannot be made until after services are provided, thus no lump-sum prepayment for future care.  The requirements are set forth in the Program Eligibility Manual 405, pages 6-7 (referred to as "the PEMs").

The second issue is just as important.  The caregiver may feel like he or she has too much to do with very little help from other family members.  Other family members may feel the caregiver is excluding them from important information, or may disagree with decisions made by the caregiver.  Financial issues can strain the delicate balance of family dynamics.

Caregiver Agreements can prevent a Medicaid penalty and family misunderstandings. A well thought out Agreement involves the following:

  1. Assess the elderly person's needs and wants.  A professional assessment is valuable, whether from a gerontologist, social worker or home health agency.  A professional assessment can curtail family disputes on what the parent needs.  A physician's statement is necessary if the elderly person may need Medicaid later.
  2. Verify a reasonable price to pay from private agencies.
  3. Itemize the care the caregiver will provide.  Do not include companionship.  Include respite for the caregiver.
  4. The Caregiver Agreement is similar to an employment agreement. Report the income and pay FICA and FUTA.
  5. Have a family meeting to reach an understanding. Give deference to the elderly person's wishes.
  6. Have the caregiver provide reports to family members to keep them informed.  Email is a great communication tool.
  7. Keep receipts for expenses to be reimbursed.
  8. Do not have the caregiver sign the Agreement for the elderly person.  Have the elderly person sign, if he or she can.  If not, have another family member sign for the elderly person under a durable power of attorney.

Some requirements of the PEMs are contrary to contract law.  For example, payments to a caregiver child are allowed only to prevent transfer of the parent to a residential care facility.  This requirement would preclude the elderly parent from paying family for care unless residential care is imminent.  Court ratification of the Agreement may be necessary if Medicaid is required later. 

Many rules were adopted to prevent abuse, whether real or perceived.  I'd like to believe that the rules are not meant to punish well meaning families who actually try to keep the elderly parent at home with a practical solution.  Now wouldn't that be an interesting case to appeal!

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