Care Giving and Family Agreements

As parents face nursing home and assisted living issues, many children step-up to the plate and decide to care for the parent in their own home. Unfortunately, many of those children are required to cut back on their hours at work or quit their job altogether. Unfortunately, many of these children need to be paid for their care giving time and the services that are rendered for a parent. Children need to be aware that if that parent were to run out of funds and ultimately have to enter a nursing home and apply for Medicaid, State and Federal Government will scrutinize any payments that were made to a child and if there is no written agreement prior to the exchange of funds, the Medicaid system may treat those payments as gifts. The rules regarding contracts are extremely restrictive and most care agreements, although accepted, are disfavored. Children need to be aware of the fact that the agreement needs to be in writing prior to the exchange of any funds, the agreement cannot provide for compensation for past services and it cannot allow for payment or services rendered after a patient has been in a facility for a certain amount of days. Additionally, if the child is not reporting the income on their tax returns as earned income, the Medicaid system may again, try and argue that this was a gift and was not truly income. Before taking on the responsibility of caring for a parent and being compensated for it, it is important that you put a family care agreement in place.