What is a Caregiver Contract?
A caregiver cotract is angreement between an aging parent and child, a relative or anyone else that sets forth the length of time and rate of pay for caregiving services, and the tasks to be performed. However, most children don’t want to be paid for services provided to their parents. But, the children are providing a valuable service, and may be suffering a financial loss by taking time away from a job to do so, or other activities.
Also, by spending down assets to pay for caregiving, aging parents can utilize this asset protection tool to qualify for Medicaid if they require a nursing home stay.
Nevertheless, it’s important to keep a number of issues in mind when considering a caregiver contract:
Taxes – the caregiver must be treated for tax purposes like a household employee, which means paying Social Security, Medicare and unemployment taxes. They’ll also need a W-2 form.
Cost. Attorneys often draw up caregiver contracts as part of an asset protection plan, which can run several thousand dollars. If done individually, a charge for such a contract is approximately $750 to $1,500.
Payment. Like other employees, caregivers may be paid on a weekly or monthly basis.
For Medicaid purposes it’s important to pay no more than what a qualified professional home care provider would receive for the same services, usually in the $20 to $35 an hour range.
Also, a caregivers should also maintain a daily diary of the duties they perform.Tags: aging parent, asset protection, caregiver, caregiver contract, medicaid, nursing home