Caregivers Should Have Contracts

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Recent studies indicate that approximately 43.5 million Americans look after someone age 50 or older. It is not known how many are paid for doing so, but the numbers are rising. If that caregiver is a family member, it’s important to draft a formal employment agreement – and disclose the arrangement to the entire family.

Employment agreements should document a caregiver’s responsibilities and hours, and set a rate of pay that’s in line with local practices. Both the caregiver and care recipient should sign the contract and disclose it to the rest of the family to avoid causing family tension or running afoul of Medicaid eligibility requirements.

If a parent will rely on Medicaid to cover future nursing-home costs, a family must pay the caregiver in a way that’s permitted under Medicaid law. Before Medicaid will pick up the tab for nursing-home costs, it requires applicants to recoup certain payments made to relatives over the previous five years to pay the nursing home.

But if payments to relatives are made under the terms of a written employment agreement, often called a personal-care contract, the law allows it as long as the contract was in place before the services are rendered.

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