Can You Be Paid to Care for Mom and Dad?
A third of U.S. adults with a parent age 75 or older say their mom or dad needs help with self-care or managing personal affairs, according to a 2014 Pew Research Center Report. While home health care and assisted living facilities are common ways to meet those parents' needs, it's also not unusual for adult children to step into the role of a caregiver.
Although most children provide care as a labor of love, there is no doubt it can take a toll. Caregivers may have to take time off work, pay bills for parents or sacrifice valuable personal time. To compensate, some people might be wondering if it's possible to be paid for their help.
The answer can be yes, but it's not guaranteed. "A lot of it depends on the type of program you're applying for," says Andy Smith, executive vice president of investments at The Mutual Fund Store and A Place for Mom advisory board member. Those programs may fall into one of the following four options.
[See: 10 Things You Need to Know About Medicare.]
Medicaid. Medicaid may be the mostly likely place family caregivers will find financial relief. Parents must first qualify for the government program, and Ginalisa Monterroso, CEO of Medicaid Advisory Group, says adult children shouldn't rule out the possibility. "A lot of people don't understand there are many ways people can become eligible for Medicaid," she says.
For eligible seniors, Medicaid will often pay for in-home care, and it may be possible for payments to go to a family caregiver instead of a hired home health worker. Currently, 15 states have cash and counseling programs that give Medicaid recipients a budget they can use to pay for expenses, including family caregivers.
Since Medicaid is administered by the states, the process for becoming eligible for these payments can vary. In New York, where Monterroso works with clients, family caregivers don't have to be certified as home health aides, but they do need to register with a health care agency that will provide payroll services for their payments.
Kimberly Walker, a New York city resident who used Medicaid Advisory Group for help with her mother's Medicaid, is quick to say the application process can be arduous. "When my mom was diagnosed [with dementia], I took six weeks of family leave to get her [settled and] on Medicaid," she says. Two days after Walker returned to work, her mother's eligibility was reversed. After that, she didn't balk at paying several thousand dollars for help from an outside party. Medicaid Advisory Group was able to secure approval for 24-hour care for her mother, making the fee "worth every single penny."
Long-term care insurance. Even with help from a third party, some people may never be eligible for Medicaid. In those cases, long-term care insurance may be an option, although there is a catch. Relatively few long-term care policies include provisions for family caregiver payments. "Typically, the older the policy, the better it was for the people buying it," Smith says. That means older seniors who bought policies when they were first marketed may have the best chance of securing payments for a family caregiver. However, the only way to know for sure is to contact the company or insurance agent who sold the policy to learn the coverage details.
[Quiz: Test Your Medicare Knowledge.]
Tax incentives. While not the same as a direct payment, tax incentives may be another way family caregivers can recoup their costs. Adult children younger than age 65 who care for their parents can deduct the cost of qualified medical expenses and mileage that exceed 10 percent of their adjusted gross income. The deduction can only be made if a person itemizes their deductions, and that makes tax savings unrealistic for some families, says Marc Minker, a tax practice leader at CBIZ MHM in New York city. "While [the expenses] are 'quote unquote' deductible, it's questionable if you get any benefit," he says. Even with medical expenses, some taxpayers find they are better off taking a standard deduction instead.
Some lawmakers are hoping to expand tax incentives, and a bipartisan bill, known as the Credit for Caring Act, was introduced last month to provide up to a $3,000 tax credit for family caregivers. It remains to be seen whether the act, backed by AARP, will be signed into law.
Rather than wait for a future tax credit, Minker suggests adult children work with an accountant to explore more novel strategies that could save money. For example, an adult child might find it makes sense to gift income-producing assets to a senior parent. The parent could pay the child for caregiving out of that income, but it would be taxed at a lower rate. Having an income might also make a parent eligible for the Tax Credit for the Elderly. "It's not without danger," Minker says. Children who are gifting assets to a parent might want to get a written agreement outlining what payments are to be made for caregiving and how those assets will be handled within estate planning documents.
[Read: Tax Breaks for People Over 50.]
Workplace benefits. Smith says many people overlook the possibility of payments through their workplace. "A lot of employers offer elder care assistance within their benefits plan," he says. Larger companies, in particular, may use elder care programs to attract and retain top talent.
Family caregivers who are looking for more resources to support them both financially and emotionally, can visit the National Council on Aging website, BenefitsCheckUp.org or search for local services.
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