Getting paid for family caregiving
Posted on 17 February 2009
By Mark Miller
Permanent URL of this article: http://retirementrevised.com/career/getting-paid-for-family-caregiving
The sliding economy has prompted families to re-think the economics of care giving, according to a report in The Wall Street Journal. A growing number of individuals providing care for family members are being paid for their work under formal contracts called caregiver agreements, according to the story. The arrangement is beneficial for family members who may need the income; another benefit is that the payments count as compensation, rather than a gift–an important fact for people who may be spending down assets sufficiently to qualify for Medicaid benefits at some future point:
In recent years, caregiver agreements have grown in popularity as a Medicaid planning tool because they can reduce the size of an estate, according to Louis Jay Ulman, a senior principal at Offit Kurman, a law firm with offices in the Baltimore-Washington corridor. That’s because a rule change extended the look-back period for making gifts to family members to five years from three.
If properly set up, transfers made under a caregiver agreement aren’t considered gifts but rather compensation because they are payments made in return for a service, lawyers say. In order to qualify for Medicaid, individuals must pass state-specific means tests for income and assets. In general, an individual may not have more than $2,000 in assets to qualify for Medicaid. Some property is excluded, including the primary residence (within certain limits).
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