En español | Imagine that you could get compensated for driving Mom to the doctor, helping her get dressed and administering medications.
In some places, and in some cases, you can. Here are ways your commitment to Mom and Dad can result in more money in your pocket — either from direct cash payments or federal income tax breaks.
Federal cash benefits
Most states offer programs that use a Medicaid waiver to allow direct federal payments to family caregivers for their services. But this means, in most cases, that only care recipients whose income is low enough for Medicaid status qualify.
In New York and California, for example, the care recipient must apply for and be granted admission to a personal assistance program. The number of hours of care covered will be determined by a caseworker. The care recipient is then in charge of recruiting, hiring, training and firing the personal assistant. Payment comes directly from the state.
Eligibility rules and program setup vary by state; for more information on services in your area, contact the National Resource Center for Participant-Directed Services.
These programs, which aim to keep people living independently and address home health aide shortages in rural areas, are far from comprehensive. And they "are in some distress now because of budget cuts in all of the states," says Howard Gleckman, a resident fellow at the Urban Institute. "But they're there, so there's at least a chance you can use some of that money to pay a relative for your care."
Direct private pay
Your parents could pay you directly for hours spent helping them with domestic, personal care and medical-related duties. "This is becoming increasingly commonplace," says Gleckman. "But if you do this, it's very important you have a caregiver contract in place."
A caregiver agreement proves that a parent is paying for a service and not giving a gift. A history of cash gifts can disqualify your parent for future Medicaid enrollment, which pays nursing home fees for those who cannot afford them.
If you do decide to enter a private pay relationship, you must:
- Pay tax on your earnings, and your parents must report the payment on their income tax forms.
- Make your hourly rate in line with the national average pay rate for home health aides, which is about $10 an hour. "You can't pay your niece $200 an hour to take care of you as a way to spend down your assets in order to become eligible for Medicaid," says Gleckman.
You might be tempted to just accept payment off the books from your parents, but that is risky, says Gleckman, because of the Medicaid issue. Cash-strapped states are being very strict in determining eligibility, and they can request five years of bank account and tax records. "If your parent has a regular withdrawal of $1,000 a month, for instance, they're going to ask about that," Gleckman says.