The Do’s and Don’ts of Compensating Family Caregivers

Using Family Caregivers for the Aging Is Not New or Unique…

If you are providing unpaid care for an aging or disabled family member, you’re not alone.  The number of unpaid family caregivers in the United States is estimated to be around 53 million adults.

The American Association of Retired Persons (AARP) recently updated their “Valuing the Invaluable” report which estimates that “family caregivers provided 36 billion hours of unpaid care worth $600 billion in 2021.” The report also stated that “the average caregiver pays more than $7,200 annually in out-of-pocket costs for transportation and other needs.”  Click to read the full report

As an unpaid family caregiver, you are likely profoundly aware of the impact this act of love is having on your life. Especially if you are caring for aging parents and have a family of your own and a fulltime job. What is important to learn as an unpaid family caregiver is that you may be able to be compensated.

Several Sources Compensate Family Caregivers

Some states and counties provide stipends, reimbursement, or other forms of compensation for family caregivers. Additionally, if you serve as caregiver for a child who has a disability and is related to you, but who is not your biological or adopted child, you may qualify for subsidized guardianship benefits.

Don’t Go It Alone

There are several important things you’ll want to do, however only one very important “don’t” in terms of seeking compensation as a family caregiver. Don’t try to do it on your own. If you want to apply or arrange to be paid for your services as a family caregiver, you’ll need to fully understand the applicable law and its implications. Personal Care Agreements often represent the best approach, but every situation is unique. An experienced elder law attorney can help you avoid pitfalls and provide guidance on Medicaid eligibility, estate planning, and other financial considerations. One important aspect that many people overlook is the tax implications which can present big problems.

The Do’s

Before contacting an attorney, here are some things to consider when deciding to seek compensation as a family caregiver:

Do Create a Written Contract
A Personal Care Agreement, or family care contract, should outline the caregiver’s duties, compensation, and other terms. This agreement can be important for Medicaid applications, estate disputes, and IRS issues.

Do Discuss Expectations
Talk about wages, paydays, scheduling, health risks, and how to handle respite care and sick days.

Do Involve Other Family Members
Consider having other family members involved in the discussion to avoid surprises later.

Do Consider Long-Term Care Insurance
While some long-term care insurance policies allow policyholders to use their benefits to pay family members to provide care some do not. If you have a long-term care policy, explore their policy options for paying family caregivers.

Do Consider Alternative Compensation
Some families may choose to provide non-monetary gifts or a larger inheritance instead of paying the caregiver. However, this can have significant tax and estate law implications, so it’s important to consult with an attorney first.

Do Consider Tax Credits
The Child and Dependent Care Credit can help reimburse caregivers for caregiving costs. In 2023, caregivers could claim up to $3,000 for one qualifying person and up to $6,000 for two or more. Some states also have caregiver tax credits.

Consider a Multiple Support Declaration
If you share caregiving duties with siblings, you can set up a multiple support declaration to claim a tax exemption.

Family Caregivers Deserve Compensation

The burden of caring for aging parents is taking a toll on far too many families. If you are struggling and know that being compensated for your time would be a benefit, give my office a call today at (470) 235-7868. Having loved ones that require care is stressful enough. Let’s explore the multiple options available and relieve some of the related stress.

Looking to find an experienced estate lawyer in the Georgia area who is skilled in asset protection and estate plan preparation? Shannon Pawley is an attorney in Georgia with expertise in estate planning and asset protection. Shannon can provide assistance with creating an estate plan to include making a will and how to establish a trust properly. If you have questions about asset protection or questions about making an estate plan, reach out to Shannon and she will be glad to help answer all the estate planning questions you might have!