Getting paid as a family caregiver seems about as likely as winning the lottery. Just ask the nation's 40 million family caregivers — spouses, adult children and other relatives — 34 million of whom provide unpaid care to someone 50 or older.
Medicare does not pay family caregivers, who traditionally have assumed these duties without pay.
But with older adults living and needing care longer and wanting to stay in their own homes, attitudes and public policies about family caregiving are slowly changing.
Thanks to innovations in Medicaid and the Department of Veterans Affairs, older adults and people with disabilities are designing their own in-home care programs and hiring family members (and, in rare cases, spouses). There's still a long way to go, though.
"These programs are so small. They're not picking up enough people," says Gail Gibson Hunt, president of the National Alliance for Caregiving.
With those caveats in mind, here are some ways family caregivers can be compensated.
If your loved one is eligible for Medicaid, check to see if your state has a participant-directed services program. These Medicaid programs are aimed at keeping people of all ages and disabilities independent and in their own homes.
Typically, the participant, working with a caseworker, draws up a care plan and hires a worker of choice, who can be a family member (though in many states not a spouse) to help with such activities as bathing, preparing meals or feeding.
Started as pilot projects called Cash & Counseling in the 1990s, consumer-directed programs expanded under the Affordable Care Act. Currently about 1 million people participate in self-directed Medicaid plans. The Centers for Medicare & Medicaid Services (CMS) provide financial incentives to states — as much as 6 percent of the cost — to offer the self-directed option.
"The federal government has been extremely supportive of self-direction," granting waivers for states to develop programs, said Suzanne Crisp, a senior adviser for PPL Consulting and former director of program design and implementation at the National Resources Center for Participant-Directed Services at Boston College.
Under self-directed plans, the participant (or a surrogate in cases of mental impairment) can have an overall budget for goods and services based on an assessment of needs. The participant negotiates the caregiver's rate of pay at or above the state minimum wage.
A financial management services firm typically performs such employer duties as collecting time sheets and issuing paychecks, filing taxes, workers' compensation and other insurance.
Programs go by different names and operate differently in each state (if they have them).
Through California's In-Home Supportive Services (IHSS) program, run by Medi-Cal, California's Medicaid, 500,000 seniors, blind or people with disabilities pay friends, family members and in some instances, spouses, for help with housework, meal preparation and personal care.
Training materials warn, "It can be tricky to be the paid IHSS care provider to a relative or close friend," noting that the caregiver is an employee in a program with a lot of rules.
Check with your local Area Agency on Aging for more information.
The Department of Veterans Affairs has several programs that pay family caregivers under certain circumstances.
Veteran-Directed Home and Community Based Services gives veterans of all ages who otherwise would be in nursing homes the ability to tailor their long-term care at home, including hiring family members or friends as caregivers.
To qualify, a veteran must need assistance with at least three activities of daily living or have a significant cognitive impairment, and be enrolled in the VA for health care. There's no income limit, but higher-income vets are subject to a copayment.
"The veteran is the employer," said Daniel Schoeps, the VA's director of purchased long-term services and support. "It's up to the veteran how much they pay the workers" — although the guideline is $20 an hour maximum.
The veteran has a monthly budget based on physical condition that ranges from $1,200 to $4,000. The average is $2,000 a month. The vet doesn't receive a check; the state or the aging office handles payments to the caregiver, employee taxes, and fees for counseling and financial management services.
The veteran-directed program started in 2009 and is available through 61 VA medical centers in 35 states. About 1,900 veterans participate, a fraction of the 50,000 veterans who receive home health care on any given day. The VA hopes to have the program operating in all 150 medical centers within three years.
The VA offers home caregivers of veterans who were severely injured or suffered mental health issues since 9/11 special benefits through Comprehensive Assistance for Family Caregivers, a congressionally mandated program. The caregiver may be a spouse, family member or friend.
"Just because we're talking about post-9/11 veterans doesn't mean we're talking about 21- and 22-year-olds," said Meg Kabat, national director of the VA's Caregiver Support program. Many who were injured in the early 2000s had already been in the service many years.
About 34 percent of the caregivers in the comprehensive assistance program are 41 to 64, and 15 percent are 50 or older. Participants receive a stipend, travel expenses, health insurance and not less than 30 days a year respite care.
"They're paid a financial stipend that represents the sacrifices they make in taking care of the veteran," Kabat said. The payment ranges from $600 a month to $2,300 a month, depending on geographical area and the extent of the disability.
The payment is not taxed, and the caregiver does not earn work credits toward Social Security and Medicare. That can be an issue for younger spouses.
About 24,000 caregivers participated in fiscal 2015. About 300 to 400 new caregivers join the program each month, and several hundred a month leave it because veterans improve through rehab and other services.
A veteran who qualifies for the needs-based VA pension and has served one day in wartime, or a surviving spouse, may be eligible for Aid & Attendance. The vet may pay a family member, though not a spouse, for help with activities of daily living, such as bathing, eating and dressing.
Housebound is a separate program that allows VA pension-eligible veterans who need help ambulating outside the home to pay a family caregiver. In both Aid & Attendance and Housebound, the caregiver must report the income to the IRS.
Peer support group, face-to-face classes and online training are available to anyone caring for a veteran or to veterans caring for nonveterans. Learn more at caregiver.va.gov.
Your family member pays you
If your loved one can afford to pay you directly for home care, congratulations. You're an employee, and you'll need to pay federal, state and local taxes.
"If you're paid under the table, you're in violation of the law," warned Hyman G. Darling, an attorney in Springfield, Mass., and president-elect of the National Academy of Elder Law Attorneys.
As for accepting payment as a "gift," Darling says, don't. "People do it all the time, but it's not right. If someone makes a gift in return for services, it's no longer a gift. It's taxable to the recipient."
He suggests the caregiver consider training as a home health aide by an agency and then working directly for the agency, which will file the necessary paperwork. In some cases, the agency may be able to bill Medicaid or Medicare, he said. Check with your local Area Agency on Aging.
If your loved one planned ahead and has long-term care insurance, some hybrid policies allow payments to family caregivers.
It may seem odd, but if you become a family caregiver paid by the family member, sign a contract. It should specify the services being performed and the payment amount, Darling said.
The documentation will come in handy if the loved one later needs to qualify for Medicaid. Under the "look-back" provision, Medicaid will examine five years of records and could say the payments were a gift, Darling said. "If you're continuing to pay someone and not reporting the payments as taxable income, each payment extends the five-year period." And that could jeopardize your loved one from being qualified for Medicaid.
Marsha Mercer is a Washington, D.C.-based journalist.
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