When kids care for their parents-for pay: The whys and hows of drawing a salary for helping mom and dad.
By Jane Bryant Quinn
*This article appeared in the AARP Bulletin in the March 2019 issue and I thought it was very important as taking care of a sick parent or loved on can tear a family apart.
About 40 million people are helping to care for older relatives and friends. Some leave their jobs to do so and some end up as live in caregivers. All give up much of their personal freedom. Should they be paid for their work?
That’s a controversial question. Families often think that providing unpaid care comes with the territory of being a daughter or son. That makes sense of we’re talking about a few hours here and there-say, paying the bills and running errands.
But what if the parent needs meals prepared, medications monitored and help with dressing or bathing? Homemaker or health aide services have a median cost of about $170.00 per eight-hour day, according to Genworth. Not many of us can write checks like that.
To solve the care problem, an adult child might decide to move in. That may be when the pay issue arises. The caregiver could be giving up job opportunities, Social Security earnings and the chance to add to retirement savings. When the parent dies, the caregiver might be cut loose with no home and no prospects. Pay or some other form of financial settlement, seems fair. The same may be true for adult children of modest means who take an ailing parent into their home.
Older people with limited income might have access to public programs to pay for caregivers, including a family member (although usually not a spouse), says Leah Eskenazi of the Family Caregiver Alliance. For a list of programs available in your state, go to payingforseniorcare.com. Some long term care insurance policies also cover a portion of home care costs. Failing these options, the family has to pay.
Here’s what should not happen: A daughter, say, moves in with Mom, who pays her secretly. There could be blowups when siblings find out. What’s more, without a proper written agreement, Medicaid may regard these payments as gifts-delaying Mom’s access to nursing home coverage if she ever needs it, says Michael Amoruso, President of the National Academy of Elder Law Attorney’s.
As hard as it might be, the family should negotiate a financial agreement. For a live-in caregiver, is free room and board enough or is payment in cash needed too? Will the family pay for the caregiver’s health insurance? What about time off for the sibling takes Mom into her home? What can the other siblings do? (For answers to many questions about the logistics and finances of caregiving, visit aarp.org/caregiving.
To clarify matters, you need a signed and dated contract listing salary and specific duties. (Search for ‘personal care agreements’ at caregiver.org for advice). Be aware that a paid caregiver is often regarded as the recipient’s employee, earning taxable income and that may require mom to file paperwork and pay employee taxes or hire a payroll company to manage the details. (For more information, see irs.gov/taxtopics/tc756.) Contracts and tax forms might seem excessive but you’ll avoid tears later by doing this the right way.
Disclaimer: This article appeared in the AARP Bulletin March 2019 and I thought it was very important to spread the word on this. In most cases, one child is burdened with this responsibility and should know their rights as well. I give Ms. Bryant-Quinn full credit for this article and credit her on a VERY touchy subject in most families.