Caregivers – Financial Impact at Home and Away

In this episode, John Ross and Lisa Shoalmire discuss issues that paid for and unpaid for caregivers might need to prepare for.

Episode Transcript
John
Welcome to another episode of Aging Insight. I'm your host, John Ross, here with my partner Lisa Shoalmire. And we are elder law attorneys, we specialize in the needs of seniors and people with disabilities, trying to make sure that they can live the best, most independent life that they can. We want you to age the way you want to age and if that means avoiding nursing home care, then we want you to do that; if that means avoiding becoming a burden on your friends, family, loved ones, then we want you to do that, too. And if you wanna do is protect that little nest-egg, that savings, protect that retirement from the devastating costs of long-term care, we wanna help you do that, too. And we know that you can accomplish these goals with knowledge, with information. And you can age the way you wanna age, but you gotta have a plan, you gonna know what's coming. You've gotta know how different things are gonna impact you as you age from this point until whatever your future holds.
Lisa
That's right. And besides, everybody's situation is so unique, just like your health is unique to you, your family situation, your financial situation. All of these unique pieces have to be brought together into a plan for you to age in place in the way that you would like to. A big piece of this aging puzzle does have to do with your family and caregivers and friends that you may have that will make a real difference to you as you age. And so today's episode, we wanna talk about the special considerations for caregivers. Now maybe... We're not necessarily talking about you right now. If you are living an independent life and plan on doing so, but for a lot of folks, their best shot at aging in place and staying in their home is by leaning on some caregivers, maybe, that can do somethings because of their youth and ability and time and skills, that maybe as you get older, you're not able to accomplish for yourself. So that's when we bring in caregivers.
John
That's right. And when we talk about caregivers, particularly home-based caregivers, generally we see these come in one of two forms. They're either third parties, there's lots of different organizations out there that provide in-home, basic daily assistance. And this is, of course, non-medical type assistance, the type of assistance that's not covered by Medicare. Well, since it's not covered by Medicare and your supplemental insurance, if you're paying for that type of care in the home, it can be quite expensive at $15, $20 an hour. If you need a little bit, it's not too bad, but if you need it a lot, if you need eight, 10, 24 hour-a-day care from somebody else, that cost can get really, really expensive, and frankly is beyond most people's means. And what that means is for many people that caregiver responsibility oftentimes falls on the shoulders of one or more of the children or maybe grandchildren or in-laws, doesn't even have to be necessarily somebody who's related to you, but essentially unpaid family care-giving. The numbers of how much free care-giving is going on out there, it's in the billions, and it's only gonna get bigger as those baby boomers get older. So the issues related to caregivers, it's a big one. So if you are that family member who's a caregiver, if you're that older adult who might need a caregiver or maybe you just have some questions about this sort of stuff, stick around, 'cause we've got lots of issues here.
Lisa
Alright. John, before we take our break, let's set up what we often see, which is it has to do with the family that may be here local and available to assist mom or dad or those grandparents that are aging at home and in place. And then, these days, a lot of folks have to move away for job opportunities, maybe they married someone else that's from another area, so they have gone to live in that area. So we have some challenges here between caregivers that are able to be right here in our community, and then we have children and family members that may be very interested in what's going on, but they're not here local to be here, day in, day out.
John
Well, and that can certainly create some unique family dynamics. And oftentimes we see situations where you've got that one child that's here, the one that's off, and maybe the communication's not very good. Maybe one of them is spending so much time and effort on that caregiver that the stress and the strain starts building up some resentment, and these can cause some significant effects later on down the road. So, what we're gonna do is we're gonna take a little break, and we're gonna talk about how do you address some of these family dynamics that are involved in this and are there things that you can do ahead of time to maybe prevent them in the future. So we're gonna talk about that in just a second.
Lisa
Welcome back, everyone, to another episode of Aging Insight. I'm Lise Shoalmire, and I'm here with my co-host, John Ross, and we are elder law attorneys here in the Ark-La-Tex. And today we're talking about caregivers, which is a big issue for folks as they want to age in place as there become skills and tasks that maybe your health prevents you from doing. We want you to be independent and stay home. And a lot of times the piece of the puzzle that makes that happen for you is to bring in a caregiver who can do those tasks and assist you as you need to be... As you need it.
John
Well, and one thing about care-giving, it's difficult, it really is. And whether you're the child who's doing the care-giving, whether you're a parent, whether you're... Whoever you are, care-giving is hard and sometimes if you're the one that's doing all the work, you might be a little resentful of that brother or sister who's off in Timbuktu and they're not having to spend every waking moment with mom or dad. And that can create some problems. From the one standpoint of that, the caregiver who feels like they're having to do all of the work and nobody's there to help them, and so they get a bit resentful. And then on the other side, is the other kids or whoever they are who are far off who maybe are not getting information. Maybe they're trying to call, but they can't get past that caregiver who, because he or she is resentful, doesn't wanna talk to that brother or sister that's not doing anything, and that can certainly start causing a bunch of problems.
Lisa
Yeah, we have seen that over and over again. So, the biggest part of dealing with this is if you're a senior or you expect to be one someday and you feel like your children can be assistants to you as you age, let's talk about some of that now. When you have that caregiver, that child who is maybe taking you to doctors' appointments, doing grocery shopping, taking care of the little home maintenance issues, going to the pharmacy and waiting in line for quite some time to pick up your medication, that person is doing quite a bit, but you wanna make sure that as the parent or the senior that you are establishing the guidelines of how you want these kids to interact. We don't want that caregiver guarding that information, because it's the only currency they feel like they have with those other brothers and sisters that live out of town. So we wanna make sure that there's full information to be accessed, and one way to do that, if you are a senior, is to make sure all of the family members that you want to be able to get information, that they are listed in your doctor's office's forms, they're called HIPAA releases, and this is the federal Medical Records Privacy Act, and you wanna make sure that the people you want to get information are listed.
John
Well, and the other piece to this puzzle, when it relates to this, are powers of attorney. One of the things we always talk to people about is a general durable power of attorney. Somebody that gives somebody else the ability to handle business decisions. Well, imagine I've appointed you out there, I've appointed you as my power of attorney. Well, you're responsible for paying bills and stuff for me, and if I wanna know what you're doing, I have a right to demand an accounting. I can make you tell me what are you spending my money on, but I can't do that if I've got Alzheimer's, or if I've had a stroke and I'm unconscious. And so one of the things you can do is make sure that you're including not just the person who's handling the business, but also anybody else that you think might need to know what's going on.
John
So, for example, I could appoint one person, maybe I appoint my son as the power of attorney because he lives here locally, but in that same power of attorney, I say that my son must keep my daughter informed, and provide her copies of bank statements so that she knows what's going on, and that way maybe I've created a checks and balances out there. So, know what's going on, know what your options are as far as how you appoint agents under powers of attorney, and realize that sometimes there can be problems out there, and those problems are pretty easy to fix on the front end. They're pretty expensive to fix on the back end, when they weren't planned for ahead of time.
Lisa
That's right, and one of the issues... And the reason we lean on family so much as caregivers is because of the cost of in-home care-giving. But you know, for a lot of families, it makes economic sense to lean on a child or grandchild for care-giving services. John, you mentioned a moment ago that the free care-giving that is going on, if we were to put a value on it, it's growing by leaps and bounds every day, and we're gonna continue to experience that growth. But if you're a senior, and you have a daughter-in-law who is... Maybe she's a schoolteacher, or maybe she's a bookkeeper, but you could afford to pay her, instead of being a bookkeeper or a schoolteacher, you can pay her to be a caregiver, then a lot of times it makes economic sense to do that. Because if you hire an outside service, they're gonna charge for every single hour that they assist you, while a lot of times, if you employ family, you can pay them a fair, or appropriate, or what you can pay, and it makes sure that the caregiver is still getting that economic benefit as if they were still working in the workforce, but yet they also are going to be giving you a lot more than just paid-for time as the caregiver.
John
Well, that's right. Now, of course, if you are paying a family member, one thing you've got to realize is that when you pay a household caregiver like that, even a family member, that person is considered a household employee. They are not generally an independent contractor. And so if you're paying that family member, you should probably get the advice of a CPA or an accountant who's experienced with issues related to payroll tax, and withholdings, because there may be some of that that needs to be done. But, it's well worth it, oftentimes, because you've got that family member who you know, who you trust, and now you can compensate them for the work that they're doing in the home, it can be a great benefit.
John
Hi, I'm John Ross, elder law attorney and board member for the Alzheimer's Alliance, and welcome to Our Place. Our Place is a day program designed to provide rest and relief for the caregivers of people with Alzheimer's and related dementias. Our Place is a safe environment, where our friends benefit from socialization in a home-like environment. Alzheimer's is devastating and affects over 17,000 families in our area. To find out how Our Place can benefit you, please visit our website.
John
Hi, I'm John Ross, elder law attorney and board member for the Alzheimer's Alliance, and welcome to Our Place. Our Place is a day program designed to provide rest and relief for the care givers of people with Alzheimer's and related dementias. Our Place is a safe environment, where our friends benefit from socialization in a home-like environment. Alzheimer's is devastating and affects over 17,000 families in our area. To find out how Our Place can benefit you, please visit our website.
John
Welcome back to Aging Insight, everybody, I'm your host John Ross, here with Lisa Shoalmire. And today we're talking about caregivers and, in particular, family caregivers. And before the break we were talking about paying that family member. Oftentimes, as the child of the aging parent it may seem a little odd to say, "Hey, I wanna get paid for that service. I'm willing to do that for free. I'm the child, those are my parents, I love them. I don't need to be compensated for that." But there are some reasons out there, looking down the road, it's not just about today. Oftentimes, Lisa and I, both in our practice will tell people that while it's okay to try to address today's situation, you always wanna be looking down the road at what's coming. For example, I have had lots of folks who maybe over a period of time, that son or that daughter, has been doing a lot of stuff for mom. And mom, being generous, and realizing that that son and daughter have been doing a lot of work for her, writes them a check every so often.
John
Doesn't take any taxes out, doesn't withhold anything, the kids don't report it as income, they just write that check to the kids as a little way to say thank you. Well, they do that maybe for a couple of months, maybe six months, maybe a year, maybe a couple of years. But what happens is at some point in time, that older adult, their care needs go up and now maybe they need nursing home care, for example. Well, because the cost of nursing home care is so high, most people will end up using Medicaid, Medicaid being the only government program out there that pays for that nursing home. And Medicaid has a rule that says, if you have given away any of your assets within five years prior to applying for Medicaid, they'll hit you with a penalty. There will be a period of time where the state will not cover the cost of your nursing home, because of any gifts that you made.
John
And having experienced this dealing with these agencies on behalf of clients, any transfer from that parent to a child or a grandchild, or whoever, they're gonna consider a gift. And you can jump up and down all day long and say, "Oh, well, mom was just paying me for this or paying me for that," but unless you've got that in writing, unless you've got a written contract that outlines whose responsibilities are what and how much you're gonna be paid for doing this and doing that, and have all of that in writing, before the money is ever exchanged, then later on Medicaid'll treat that as a gift and disqualify you. So, if for no other reason, have that written caregiver contract, just so that you're not penalized later on down the road. Now, of course, the other side to this, you don't want to get penalized with Medicaid or something like that, but there could be some benefits to having that written caregiver contract. For example, if the parent you're caring for is a veteran or maybe the surviving spouse of a veteran.
Lisa
Well, that's right. And I love the way you built in how we get to having that care contract in writing. It's imperative if there are transfers between a parent and a child and that parent eventually applies for Medicaid nursing home care, but also with the veterans benefits, we can use the costs that that parent is paying over to that child for care-giving services, we can use that as part of the costs that we're able to show to the Veterans Administration in order to obtain veterans benefits for our wartime veterans, or their surviving spouses. And so, if we have that written caregiver in place, and we have that consistent payment between the senior and their caregiver, then it's all very legitimate and we can use those care-giving costs to show third parties what's going on.
John
That's right. So, lots of reasons here to use family caregivers. I think that's great. I think that's a great thing, that families are willing to take care of their parents, that the children are willing to take care of their parents, that grandkids maybe even step up, even in-laws, people who are not necessarily blood-related, many times are willing to step in there, and help care for that person so that they can age at home, in the way, in a place that they're comfortable and in a way that they're happy. All of that can be done, but consider whether or not compensating that person, is appropriate. Just because you're willing to do it for free doesn't mean that that's the best option. Oftentimes, having something in writing that explains all of this, and who's doing what, and who's responsible for what information, that can solve some problems between the kids, because everybody knows what's going on and everybody has the information and they know whose rights are affected, and what information they're entitled to. It could have a positive effect if you ever need Medicaid, because that written contract, it's gonna keep you from getting penalized for transferring assets.
John
And if you're a veteran or the surviving spouse of a veteran, this could bring a little extra money in. You might even be bringing in as much money as you're paying out, in which case it's nothing lost, everything gained sort of situation, so it can be great.
Lisa
Well, that's right. And of course, for the caregiver, if you're getting compensated for services then you, of course, are gonna have to report that income, make sure that it's included on your tax return, because the Internal Revenue Service would like to know about all of your sources of income, so make sure and plan for the income tax issues.
John
And don't get scared away just because we say tax. Just because somebody says you're gonna have to report a little bit of tax, don't worry about that too much. For example, if you reporting a little bit of the income as taxable income to you, means that your mom or dad can get some VA benefits that might be $20,000 a year, that's certainly gonna be much greater than any tax bill that you're gonna have to pay. So, keep all of these different aspects in mind when you're thinking about caregivers. And of course, if you have any questions or if you have any comments that you'd like to share with us, you can post those on our Facebook account at Facebook.com/aginginsight, or you can find us on the radio, every Saturday at noon, at 107.1, that's live call in radio, so you can just call, talk straight to us, ask whatever questions you got.
Lisa
Yeah, we love it. Try to stump us. We're live on the air. And we look forward to bringing this information to you every week. And certainly, if there's something you wanna know about, we'll be glad to talk about it, you just let us know, and we'll see you next week.
John
Good bye.

Leave a Comment

Your email address will not be published. Required fields are marked *

Aging Insight is brought to you in part by: