Caregiver Pay

Jmeidinger

This is an awkward subject.  Pay for caring for a loved one.

But the simple fact is, my wife and I gave up our lives we were building in California and moved home to South Dakota to keep my mom out of a nursing home during the pandemic.

For 9 months now, since we walked into this buzzsaw on November 4th 2020, my wife and I have been providing her round the clock care.  My wife sleeps days, I sleep nights.  We've been able to keep our monthly bills like our car pmt covered with savings.  But that's running out.  

We have decided to continue this as long as possible.  For a variety of reasons, primarily my mom's long stated wish that she would die rather than goto a nursing home.  After the life she's led and how much she's done, she deserves to die peacefully in her own home.  Not medicated sitting in a bedroom somewhere drooling. 

My mom does have an IRA.  And my sisters have fully endorsed us drawing some form of compensation for living in limbo until this situation resolves itself.  We don't need much.  So my question from those who have gone through this process before....

Is it possible to simply use the annual gift exemption to help us pay our bills and avoid having to set ourselves up with w2s and all of the extra rigamarole that goes with being "employees?"  We're not employees so much as live in slaves lol.  

My mom was a self employed CPA. So ordinarily it would be her I would ask this question but I can't for obvious reasons.   In my research it appears that there is a pathway available for this option.  According to this link, the IRS does not force a family member to pay self employment taxes on compensation received (which is what payroll taxes are.)

https://www.irs.gov/businesses/small-businesses-self-employed/family-caregivers-and-self-employment-tax

It does require reporting as "other income" from a 1099.  But those are all state and insurance company payments.  Not money that already exists within the family.  

Any guidance, or even tips on where we should go to get help from any programs available would be much appreciated.  

loveskitties

You probably want to contact and elder care attorney for the fine details.

If you have DPOA for financial matters for your mother accessing her retirement account should be no problem.

If you think in the future you will need to file for Medicaid on her behalf, you need to know if they will consider any "pay" as being a gift if it was not declared by you as income.  It could impact acceptance to that program.

Wishing you best results in your search for info

Jmeidinger

Hi loveskitties.  My sister and I are coguardians.  Paperwork was filed July 12th.  We are a cautionary tale in getting this taken care of BEFORE things get too bad.

We have regular financial reports we have to submit.  So there's no danger of any kind of funny business.  I know that's systemic within the elder care environment, but our needs are few.

The kinds of things we are looking at is simply drawing enough money monthly to pay for health insurance for my wife and I.  "Unemployed taking care of ma" doesn't have a good benefits plan lol. 

Despite being unemployed, the cheapest premium we could find thru the healthcare.gov site was $535 a month with a $17,000 deductible.  We can't afford that on our savings.  So we are trying to find other options and my sisters are amenable to drawing on mom's savings. 

A dementia caregiver specialist we are working with has been push push pushing us to take care of ourselves and prioritize it.  We're trying to figure out sustainable ways of doing that and unfortunately when it comes to health concerns, financial concerns are an ugly, socially awkward conjoined twin.

PickledCondiment

You definitely need to consult an eldercare attorney and a CPA as soon as possible.  Unfortunately, there are so many questions, issues raised by your post. In no particular order: 

-Medicaid has a look back period eligibility.

-A dementia specialist (while skilled) does not have the legal or accounting expertise your situation requires.

-Does your mother has assets in addition to the IRA, i.e. house, trust, investments? (All these will count against her Medicaid eligibility)

-Does she have a will?  Who is the named executor?

-What is State of South Dakota definition of co-guardians; what rights, responsibilities do all the parties have?

King Boo

www.nelf.org will yield a list of Certified Elder Law Attorneys (CELA) who are the absolute go to professional to help with this.

Properly done, if you provide care that keeps her out of a nursing home for a period of 2 years, the house may be deeded to you and becomes a non-countable asset for Medicaid purposes.  But the documentation has to be done properly and certain criteria to be met.

Additionally, a legal family Caregiver's Agreement can be done and it spells out the financial compensation, terms, etc and can go a long way to help prevent family discord.

Don't overlook this important step.  One mis-step or mis-documentation could cost 5 years of care should she become Medicaid eligible.

I know you have the best of intentions and your effort in moving quite admirable.  However-

The wishes of yesteryear (stay in my own home) are uttered when healthy and the person has no idea of what lies ahead.  They are words spoken out of fear.  They are words spoken when they don't know that their future care needs can take an entire family out, destroy a marriage or ruin ones health.

It doesn't always go that way - there are many on the boards that have had successful journeys with their loved one at home.   TessC is a poster who comes to mind.

But care needs must drive the decision making, and if the day comes for you, as it comes for many, when she can no longer be cared for in her own home, I assure you - with proper research, work, visiting, monitoring and advocacy - she need not sit drooling in a nursing home as you describe due to over medication.   That's painting with a pretty wide brush.  Lots of us have had to place. And many found quality, good compassionate care, when our LO required it.  

Anyway, my main point is a CELA can chart a good, legal, steady course for you so that things are done the correct way to optimize things for you and your Mom.  They can also help with a lot of tax questions, and even have good insight about area resources. 

But interview well.  As with any profession, it's important. 

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Jmeidinger

Hi Pickled.

Everything you've brought up is something already in consideration.  I appreciate the reinforcement.  My sister and I have been working with mom's attorney to become her co guardians.  A CPA is far and away a better source for federal tax considerations than an elder law attorney, however this is a highly specialized subject and your average CPA is not going to have answers without research.  My source on that is having grown up in a family of CPAs

I don't like paying people to do research when I've also spent some time as a tax accountant in the family business myself.  I've been the guy doing that very research in the past, especially vis a vis the Affordable Care Act ... and this thread is exactly how that type of research is done

But I don't understand your references to Medicaid.  I didn't bring up Medicaid.  I'm not on Medicaid.  My mom isn't on Medicaid.  Medicaid has nothing to do with our situation and I don't anticipate it having anything to do with our situation.  Can you expand on why Medicaid popped into the conversation?  I'm not seeing the connection.  Are there Medicaid programs for people with FTD?  Because my mom doesn't qualify for Medicaid and neither do I.  (Hence the price for monthly premiums thru healthcare.gov)

Jmeidinger

Hi Victoria,

The reason I brought up drooling in a corner is because that's exactly what both her primary care doctor and the hospice doctor did to my mom.  Giving her increasing amounts of relaxants and anti psychotics like Haldol until I finally stepped up and said ENOUGH and stopped giving her these drugs as she got more and more out of control, with her symptoms being treated by yet ANOTHER drug.

 Since I stopped all the drugs to treat the side effects of other drugs, my mom has bounced back completely and even graduated out of the hospice program a few months ago.  So "faith" that doctors in my area understand how to treat this disease is pretty low.  We are in a low population area of the country.  Specialists and top of their field physicians are in short supply

It's also as a result of visiting both my Aunt and my grandmother and seeing them "drooling in a corner" in the nursing home while they were suffering with this disease.   I would even go so far as to say my mom's phobia for nursing homes and the entire reason I moved across country are because she watched her mother and her sister decline and die in locked wards.

We were told by her doctors she would be dead in 6 months.  Now that I'm making the medical decisions and challenging the advice of her physicians, her most recent checkup last week indicated she is physically healthy and could be around for another several years.  

I am 50.  My wife and I thought we were giving up a year of our lives to help my mother.  We could afford that.  But several years?  We gotta figure out a new direction.  Retirement isn't a concern of mine.  Making sure my wife and I don't get screwed inadvertently by circumstances in the short term is tho.

Has no one on these boards been paid by family to care for their family member?

Cynbar

I think the reference to Medicaid was a warning to avoid anything that might preclude her from qualifying in the future, Even though family is caring for her now and may expect to continue this, sometimes unforeseen events arise. Caregivers can get sick or have other emergencies, PWD can sometimes become unsafe at home (wandering, violent behavior, and so on.) Medicaid has a 5 year lookback period, and a person can be denied Medicaid for any irregularities during that time such as money given away. I believe posters are suggesting you check to make sure that any money you might get does not violate any Medicaid rules, just in case it's needed in the future to pay for placement. Most people couldn't be private pay for too many years. . None of us can be 100% sure what the future holds.

Jmeidinger

To put this thread back into it's original context:

Has anyone been paid by family to care for a loved one?  If so, are those payments subject to payroll taxes?  The link to the IRS I shared in my OP indicates no.  Only income tax.  But the examples cited all reference sources of income outside the family. 

Which is where the annual gifting rules come into play.  A family member can "gift" another family member upwards  of $15,000 annually with no reporting requirements.   That's more than my wife would need to pay our health insurance premiums, so that's the direction I'm probably going to go.

I expect that anyone who has received compensation for giving up their job to care for a family member would be able to answer this question pretty easily with a yes or no.

Jmeidinger

Hi Cynbar;

Ahhhh!  I see.  I am pretty clueless when it comes to assistance programs.
 
And what you're referencing is actually the decision I have in front of me now.  We have already been through serious behavioral and aggression problems.  In the past 9 months since my wife and I stepped through the looking glass we have learned a ridiculous amount about this rare disease. 

That 9 month (so far) commitment was based on diagnoses from her doctors that indicated she wouldn't live past another 6 months.  Now it looks like the old girl has a few more years in her.

What I'm doing now is a fact finding mission to try to make an informed decision as to whether my wife and I can commit to 2 or 3 more years of this ... or whether she needs to go into a nursing home sooner rather than later and I just need to resolve myself to the inferior care she would receive there.  

We sold the family tax practice 5 years ago.  My mom has more than enough money to pay for her needs for the next several years if need be.  And my wife and I are seeing the decision we're making now as an irrevocable long term commitment.  If we decide to be her end of life caregivers we are not going to have any takebacks.  

And I'm certainly not seeing the $10-15,000 a year we would receive as compensation as an unreasonable expense that should cause any problems, considering both that my sister handles the money and would handle paying us while we handle front line care, and that hiring an outside caregiver would cost us that same amount for just a couple of months  

King Boo

www.nelf.org

a CELA can assist you in determining if the house can be deeded to you as a non countable assed for Medicaid purposes - lots of documentation, but in short, if you provided care that kept her out of nursing home level care that she required, for a 2 year period, this may be a possibility.

No matter whether you place or continue, this is an extremely important step, see a CELA.

They can also execute a family caregiver agreement that spells it out for all parties.

While lots of nursing homes are sub - par, it's painting with a pretty wide brush to say all are inferior.  There are good ones out there, but they take a lot of work to investigate and find.

loveskitties

Jemidinger,

Here is a web site that addresses your question:

https://www.agingcare.com/Articles/getting-paid-for-caring-for-elderly-parents-134187.htm

Hope this helps.

LicketyGlitz

My sister and I paid ourselves, Jm, because we could not afford to go years without a paycheck, and because my mother had the financial means to do so. We went through a payroll agency as I felt it important that we continue to contribute to our social security, and I wanted everything above board for any relatives or friends who had concerns that we were doing something shady.

I used several payroll services through the five years we cared for Mom, and I can hands down recommend Home Work Solutions as the best one by far. We switched to a cheaper one to save money and they screwed up Mom's employer taxes so bad we had to switch again within six months to have another company clean up the mess.

If your siblings are on board with it that's awesome, they recognize the financial toll this takes. Keep it above board so no one gets weird about it later on (everyone's recommendation to see an elder law attorney is spot on), and don't throw your own financial future off the cliff if you can help it.

p.s. You do not have to pay taxes on monetary gifts from your mom - $15k is the max in any giving year.

LovingAwareness

Lickety, thanks for the recommendation of a good payroll company. That might be a solution for my family. Bro and I living here with Dad and trying to keep up work and caregiving, which won't work much longer. (Everyone keeps saying, "Don't quit your job, oh God, no, don't quit!" and I don't understand why, since doing both is going to physically kill me through inhumane lack of sleep, lack of any exercise whatsoever, 24/7 multi-source toxic stress, and shameful junk food diet because I literally cannot spare 5 minutes to make a smoothie.) If Simone Biles can do it, why can't I? She competed for 8 years at World and Olympic championships through injury and the unimaginable pressure of carrying a nation's hopes on her shoulders, true, but I have been through 11 60+ hour/week RFP busy seasons in a row while trying to carry my Dad's life alongside mine. Do caregivers never get "the twisties" and need to step back to focus on their mental health? 

Anyway, I have again digressed, but one question - were you able to write off the care expenses paid through the payroll company on your Mom's personal income taxes as medical expenses? Currently we are writing off Dad's memory daycare, on the advice of his accountant, but I'm not sure if the IRS would consider payments to family members as proper deductions. He has lost his ADLs and definitely needs the help, there's no question. But does it make a difference if you go through a payroll company in that respect? Or if you wanted to write off the payroll would you have to go through an elder care agency, if you could find one willing to hire and pay you - but then of course the agency would keep half of the money.

Catcare

I am conservator for my mom and when I decided to move her into my home and become full time caregiver (meaning I would have to leave my job as an RN), I petitioned to receive payment from my moms account. This was OK by the judge. I also in the petition asked that her account pay my medical premiums. As the gardian ad lietem explained to me, since she is living with me she also pays half the household expenses. Of course I have to fill out reports yearly on these as fiducuiary reports.  Of note I had to get agreement from my siblings (6). I am lucky that they were supportive and glad for mom to be cared for. I have treated this as self employment and have paid self employment taxes myself. I don't know if this is helpful, I hope so.

LicketyGlitz

Loving, Mom def got to write off our pay as medical expenses, but she wasn't in memory care, so I don't have an answer for that question. I'd ask an accountant about that but if you are giving up your job to care for your dad that's still a job, and if the financial situation makes it possible you should be compensated. It took me awhile to not feel guilty about Mom paying me to be her caregiver, but I did it for 5 years, I spent down my savings in the beginning but there's no way I would have been able to go five years without income.

It would probably be a good thing to talk to a payroll accountant to get the details on the payroll taxes your Dad would have to pay. Then you can make a good assessment whether agency help might actually be more affordable while you continue your current job. We about broke even in that respect.

LicketyGlitz

Two things... Yes, your mom will have to pay payroll taxes if she employs you as her caregiver. If it was a contracted situation I am not sure.

And... everything about dementia is an awkward conversation! Don't ever feel weird about asking the forums whatever you are wondering 'cause someone has either been wondering it too or already through it!

LovingAwareness

Lickity, thank you for the advice. This helps us out and lifted a block in my planning. I was not really aware of a payroll co./paying payroll taxes as an option - I thought the options were to just gift money from Dad's accounts for us or to quit my job and live on my savings. This is better.

I looked up average live-in caregiver salary - about $37K per year (probably higher in the high-cost area where we live) - and if we hire a payroll company to administer about $17K each annually for my brother and myself to split the work with Dad - that's about 70 hours a week of care at minimum wage of $9.50/hr in Virginia- accounting for 12 hours a day of sleep average, which we won't charge him for, and 15 hours a week at daycare, that's an income that might work for my brother and myself for a couple of years. We live here for free in Dad's house. I'd probably keep covering half groceries and utilities, as my financial condition is stronger than my Bro's. We'd be getting some Social Security credits, would be able to get ACA health insurance plans, and we could each have some part-time/contract work in addition, since we split the days. It's good to have a care partner. I don't think it would work for either of us on our own. 

Dad's payroll taxes would be about 7 percent, I guess ($2,400/year), and the services of the payroll co. about $1,000 per year. 

It's affordable for Dad (barely), and objectively a pretty good deal - two family caregivers at lower cost than he would pay a live-in caregiver - ($37K+ per year plus full room and board) - and far less than 24/7 shift care from an agency, which would run $220K per year plus.

Better for me than drawing early from my 401k, which had been my plan. Should work for Bro, who can keep his freelance work going.

Of course Dad's needs could turn on a dime and render this plan obsolete if he needs more constant hands-on care than we are capable of, loses mobility, or if he has a medical setback. That's the catch, right? Eating is becoming a big problem for him. Last night's dinner I actually had to put the fork in his mouth to get him to eat bites, for the first time. We might have already missed the boat on doing this. He might need a facility sooner rather than later. 

jfkoc

I think the use of the annual gift is brilliant.....15K to you and 15K to you wife. The question would be does this screw up Medicaid.?

edited in;

Many people believe that if they give away an amount equal to the annual gift tax exclusion – currently $15,000 to any one individual – this gift will be exempted from Medicaid's five-year look-back at transfers that could trigger a waiting period for benefits.  Nothing could be further from the truth.

PF06840

When my other needed serious care, my sister and her husband went to live with her in her house in Florida and they were paid.  Mother herself had set up a trust for her benefit and I and  another sister were co-trustees (don't ever have co-trustees!  The fights were ruinous.).

My caregiving sister was given money for groceries and incidentals (trips to the hardware store, dinners out, booze, etc.), and likewise they lived with her rent-free, and no one declared any of that as "income". 

I also sent them $ monthly as caregivers, and what they did with that was their business.  I considered them independent contractors, like my lawn guy.  I don't submit info to the govt. about what I pay him.

The records were pretty clear, with receipts kept, and payments recorded.

I did it consult an attorney, and figured if the IRS came after me or them we would each deal with our own penalties, if any, at that time.  

The IRS never did.  They had bigger fish to fry.

Ask an an attorney, then ask yourself if what "they said" was actually likely to happen, and how much damage would it cause.

And yes, I also used the limit of the gift exemption for each of them, so the net paid out for caregiving services above that exemption was relatively minor.

FWIW.

LicketyGlitz

Loving, I think the ONLY THING you can count on in dementia is that your dad's needs will definitely turn on a dime! My sister and I finally decided to go the memory care route, but it didn't work out for our family, so after a very expensive five week vacation we brought Mom back home.

Our solution after that was to hire a p/t live-in because we just couldn't handle only the two of us anymore.

However you decide to get your father through dementia is gonna be the best way for you all. Even if you F' it up for awhile, your can always find another way. Good luck to you and your family!

tdnp

Jmeidinger

 I would use extreme caution there are several states where children are obligated to care for elderly parents, it is called filial responsibility.

Paying yourself or other family members could present itself to the IRS that you are trying to spend down their asset. 

“In the U.S., requiring that children care for their elderly parents is a state by state issue. ... Other states don't require an obligation from the children of older adults. Currently, 27 states have filial responsibility laws. However, in Wisconsin, children are not legally liable for their elderly parents' care.Oct 5, 2020”

LovingAwareness

tdnp wrote:

Jmeidinger

 I would use extreme caution there are several states where children are obligated to care for elderly parents, it is called filial responsibility.

Paying yourself or other family members could present itself to the IRS that you are trying to spend down their asset. 

“In the U.S., requiring that children care for their elderly parents is a state by state issue. ... Other states don't require an obligation from the children of older adults. Currently, 27 states have filial responsibility laws. However, in Wisconsin, children are not legally liable for their elderly parents' care.Oct 5, 2020”

Tdnp, I could be wrong, but don't filial responsibility laws come into play in a situation where you have indigent parents and their children have the means to help support them but don't want to? It seems like the discussion here is more about the opposite scenario - parents who have means with children who want to care for them and are making financial/employment sacrifices to care, but not able to do it without being paid at least subsistence income. 

Doesn't a formal caregiver contract that is created by a certified elder care attorney meet Medicaid look-back requirements if the parent needs Medicaid coverage at some point in the future? Medicaid itself will reimburse family caregivers because it is cheaper than facility care, so it seems like if a caregiver contract is drawn up correctly and records are kept diligently then Medicaid look-back should not view caregiving payments to family differently than payments to other parties for the same services, especially if family caregivers are paid at below-market rates. But this definitely is a strike against the gift method and a reason to formalize the plan. Seems like a recommendation of a geriatric care manager and a formal contract prepared by an attorney are a must if there is any chance the elder might ever run out of money and need Medicaid - which is just about everyone.