Aging & Needing Assistance with Activities of Daily Living

As we age, we often need assistance with what are called Activities of Daily Living or ADLs.

Occasionally our care needs are so great that a family member becomes the primary caregiver.

In many families, the situation is familiar:

  • As your loved ones grow older, they need help with daily and routine tasks.
  • Often, a family member steps in and takes care of the elder.
  • Over time, the senior needs more help, so the family caregiver’s responsibilities grow.
  • As the caregiver spends more time with the senior, even in harmonious families, other family members can become resentful, suspicious, etc..
  • If the senior gives money to the caregiver, disputes are even more likely to happen.
An underlying question is: When should a family caregiver be paid?

As a starting point, get the whole family focused on the senior in need of care and his or her wishes.

When a senior begins to need help, it should signal everyone that the family needs to pull together and develop a comprehensive care plan for now and the future. The key element of the plan is determining who assumes the caregiver role and whether that person should be compensated.

When one family member is spending significant time taking care of the elder loved one, it is appropriate to consider monetary consideration.

Key questions should include:

  • Is the family caregiver spending substantial time taking care of the elder?
  • Does the elder need regular, daily, routine help with personal care and other household tasks?
  • Is the family caregiver the only or primary person helping the elder loved one?
  • Has the caregiver given up employment or other income to be able to care for the elder?
  • Is the time spent with the elder roughly equivalent to a part-time or full-time job, in terms of daily, regular, and repeating responsibilities?
  • If someone outside the family were providing the same assistance to the elder, would the family expect to pay that person?
Affirmative answers to the questions signal a situation that probably justifies compensation for the family caregiver.

However, it is a big mistake to have the elder to start giving money to a family member, even if the whole family agrees it is the right thing to do.

If the elder might be eligible for Medicaid in the future, those payments could jeopardize that eligibility.

Without a proper caregiver agreement, the payments will be considered to be gifts, not compensation, and will factor into the financial analysis that Medicaid conducts, including the five-year look-back period, to determine eligibility.

In addition, the payments are considered income for the caregiver’s income tax purposes regardless of how the senior being cared for views them.

As more and more families face their elder parents’ changing needs, many families are drawing up a legal contract called a caregiver agreement, also sometimes referred to as a personal services agreement or personal care agreement.

A proper caregiver agreement is critical under the law in order for the payments not to be considered a gift under Medicaid law.

In fact, unless there is a proper notarized care agreement with any caregiver — whether a family member, non-relative individual, or a company — any caregiver payments will likely incur some penalty with regard to Medicaid qualification.

  • A caregiver agreement details all the tasks the caregiver will perform and sets the compensation associated with those tasks.
  • To meet Medicaid requirements, the agreement must be signed and dated by both parties, notarized, and supported by specific medical documentation.
When an elder begins needing assistance from a caregiver at home, the family should make sure that all of the elder’s needs are addressed.

That includes ensuring that the elder has in place all necessary documents such as a Last Will and Testament or other estate planning vehicle, a Durable Power of Attorney, and an Advance Medical Directive for Healthcare to ensure that all eventualities are addressed.

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Planning ahead is a gift to your loved ones!