Elder & Disability Law Office, Ltd. John Belconis, JD.
350 South Northwest Highway, Suite 300, Park Ridge, IL 60068
Phone: (847) 430-3652
Can a Parent with Parkinson’s, Alzheimer’s, ALS or other Debilitating Diseases Pay Their Child to Care for Them?
This is one of the most frequently asked questions at the Elder and Disability Law Office of John Belconis. Millions of Americans are currently caring for an elderly family member at home, without receiving regular compensation. It may be beneficial for both parties to enter into a care contract wherein the caregiver accepts payment for the care they are providing their loved one and also formally assumes responsibility for that care.
For example, if the loved one you are caring for reaches a point where nursing home placement is the only option, then without proper planning almost all of their money will be considered available to pay for their care at the nursing home. If the proper steps are not taken they will not be eligible for Medicaid assistance until most of their assets have been depleted. Certainly, the care that was provided by you, while they remained in the community, is just as valuable to them and worthy of payment as the care that will be provided to them in the nursing home. A person with a care contract in place, can pay their caregiver child, and every penny spent will count towards their “Medicaid spend down” should they apply for benefits.
Having a care contract in place also ensures Medicaid will not impose penalties on the money received by the caregiver child. Sometimes an elderly person will randomly give sums of money to their caregiver child as payment for the care they provide. Without a contract in place, Medicaid will assume the money transferred is a “gift” or a “transfer of assets” and will refuse paying for nursing home costs unless the child gives back the money to the parent. The problem is that the child may have spent the funds and cannot payback the parent. As a result, the nursing home will go unpaid and the crisis will escalate from there.
From a caregiver’s perspective, although the caregiver child is willing to provide services for free to their parent, it is often difficult for them when, at the time of their parent’s passing, the caregiver child receives the same inheritance as the other
heirs that have not provided any care. On the flip side, if a caregiver is receiving payment and there is no contract in place which defines the care they have been working hard at providing, then other heirs may be upset by the additional monies the caregiver received.
The bottom line, if you are caring for a loved one or receiving care from a loved one, a care contract is a good idea for both parties involved. Before entering into such a contract, be sure to consult someone with experience in drafting care contracts and who knows the effect on Medicaid qualification.
It is also important to understand that if a child has been living in their parent’s home for over two years and caring for their parent during that time, there is another Medicaid planning technique that may be available which would allow the parent to transfer their home to the child, without incurring Medicaid transfer penalties. This is not true in all cases, but if you meet certain criteria, the exemption known as the “caretaker child exemption” could be a great way to ensure the parent’s home stays in the family. For more information on care giver contracts, caretaker child exemption or other elder law issues, consult a knowledgeable elder law attorney.
* If there is an area of elder law you would like to know more about or have any questions or concerns, then please give us a call at 847-430-3652.
Disclaimer-This newsletter does not constitute legal advice. This information is provided for educational and informational purposes only. Nothing is meant or intended to create an attorney client relationship. For specific legal advice relating to your situation contact a competent attorney in your jurisdiction.