Several months ago an article appeared in the local newspaper about being compensated for family caretaking. While I knew about programs for low income families in my county, I was not aware of concerns for middle and upper income families. It seems that if the individual made gifts to their caregiver and then went into a skilled nursing facility and applied for Medicaid, the individual would be under the “5 year lookback” period (monies that were given to others for 5 years prior to the application for Medicaid) and if the amounts were substantial, the gifts might create an ineligibility period for Medicaid.
The attorneys (the authors of the article) suggest creating a written document that spells out exactly what services will be offered and the reasonable amount of money given for each service. For example, with meals (who will do the shopping, cooking and cleaning up), who will do home maintenance, who will do the bookkeeping (bill paying, balancing the checkbook), and who will provide transportation (who buys the gas, services the car, pays for insurance and/ or car payments). Also, it is suggested that a written log be kept of the time and money spent.
Record keeping is essential. Look into a “Caregiver Agreement” with an attorney to make sure the individual will not be penalized if he/she needs to go on Medicaid. Also, talking with an attorney may educate you as the caregiver about your responsibility to report your income to the IRS.