Karen G. Jackson, Esq.

Here is the problem: Let’s say Dad is elderly and frail. Dad lives alone. He needs help with his personal care, such as taking medicine, trips to the doctor, shopping, cleaning, food preparation, and so on. Daughter helps him. Occasionally, Dad pays Daughter for the help. Later Dad enters a skilled nursing home and applies for MassHealth benefits to pay for his long-term care. (Medical insurance does not pay for nursing home care.) The MassHealth application is submitted along with Dad’s bank statements. After reviewing Dad’s bank statements, the MassHealth caseworker asks about the checks paid to Daughter. The caseworker is told that the money was used to pay for Dad’s care. The caseworker asks to see the caregiver contract. The caseworker is told that it was an oral agreement. The caseworker asks to see Daughter’s income tax returns to prove that the money was treated as income and that the income taxes were paid. As is virtually always the case, Daughter did not report Dad’s payments on her tax return. The caseworker calls the payments gifts to Daughter. Dad will not receive MassHealth benefits until all gifts Dad made within the five-year lookback have been “cured.” Daughter, or someone else, must pay Dad back.

 

The solution: A written Caregiver Agreement is signed by Dad, or by the person named in Dad’s Durable Power of Attorney; and, is signed by each of Dad’s caregivers. The caregiver can be a child or anyone else. Every caregiver must report Dad’s payments as income and pay the income taxes every year. Because the caregiver usually is not a bonded, trained professional, I recommend an hourly rate not to exceed $15. The services provided must be actually needed by Dad. I suggest that the caregiver be paid weekly or every other week. A Caregiver Agreement also makes it fairer among siblings: the child helping more gets paid more.