Should Your Family Pay You to Care for a Parent?
An expert explains the benefits of a personal care agreement, from compensation to peace of mind
During a recent interview with a health reporter, I suggested that people consider drafting a written agreement to pay a family member for providing care to an ailing relative. The reporter paused. "But that's not right," he said. "Family should care for their parent because it's the right thing to do, not for pay."
He's not the only one who feels this way, but the realities of caregiving are changing.
Tending to a parent can be a gift, an opportunity to say thanks for the love and support he or she provided while raising you. But even if it's a responsibility willingly assumed, it can be a challenge without reward. We know that our nation would be in a world of hurt if unpaid family caregivers, the backbone of our long-term care system, walked off the job. The estimated annual value of the care provided by family, partners and friends is about $450 billion, based on calculations by the AARP Public Policy Institute.
Yet proposing that some caregivers, especially adult children, receive compensation for their work can seem like heresy when it conflicts with other family members' expectations of how to provide for a parent in need.
(MORE: Are You a Caregiver or Just a Good Child?)
Exploring a Personal Care Agreement
The mechanism to formalize such compensation is known as a personal care agreement, sometimes called an elder or family care contract. It's a written agreement between the family member providing caregiving services and the relative receiving care (or other family members in cases where the recipient is not competent to enter into legal contracts).
Such an arrangement can prevent conflicts about who will provide care and how much money will change hands. The caregiver's tasks should be well-defined; families may want to consult a geriatric care manager or social worker for advice. Provisions for health or long-term care insurance for the caregiver, and petty cash for household upkeep, may also be included. Agreements typically include an escape clause allowing either party to terminate the contract, along with plans for backup care in case the caregiver becomes ill or takes a vacation.
Formalizing such an agreement, understandably, can be difficult. The Family Caregiver Alliance offers advice for holding family meetings about parental care responsibilities. Having a trusted lawyer, social worker or geriatric care manager present may be helpful.
It can be awkward, but a contract can relieve a family's stress. Consider the situation of a single 55-year-old woman I recently met: She was laid off from her paralegal position during the economic downturn and job prospects were slim. Then she got a call from her 85-year-old father's neighbors, complaining that her dad was regularly appearing at their front door asking for help to get back into his own house. After a conversation with her brother and sister, who both have families and live in other states, she agreed to move in with her father to look after him.
While no longer having to pay rent eases some of her cash flow worries, caring for her dad, who has advanced memory loss, has made job hunting or having a social life next to impossible. She felt the move was the right thing to do at the time, but then she wondered if it was wise to put her life on hold and miss out on earning a salary, saving for retirement and receiving employer-subsidized health insurance for her own chronic health issues.
I suggested she might want to negotiate a personal care agreement with her siblings. Her sister and brother, who handles her father's finances, could agree to designate a portion of their dad's pension each month as compensation for her providing a specific set of duties. In this way, she would earn some income and receive a certain amount of cash to pay for gas and groceries, which she had routinely been covering out of her own savings.
The woman's first thought was: "It's impossible. My brother would never go for that." She first discussed it with her father, who, in a lucid moment, said he was all for it. That helped her get up the nerve to talk with her brother. To her surprise, he was open to discussing the idea, and the three siblings arranged a video conference call to iron out details.
An Estate-Planning Role
There is no standard language for personal care agreements, which cover more than responsibilities and compensation — for example, remembering a caregiver in the settlement of an estate. My friend Meg's mother, Grace, 93, resides in an independent senior living apartment complex in another state. Since fracturing her hip in a fall last year, Grace uses a walker. Meg, a corporate executive with a heavy travel schedule, is totally dedicated to her mom but can't keep up with Grace's penchant for firing the home-care aides hired to help her with bathing and housekeeping.
Meg depends heavily on her widowed sister-in-law, Jean, who lives near Grace and willingly visits her daily. Jean, who has no children, has refused Meg's offers to help cover the cost of taking her mom out to lunch every week and to compensate her for dealing with the agency that provides home-care aides. She has told Meg she doesn't want to be seen as less than a friend to her mother-in-law.
A few months — and a few more aide firings — later, Meg again told Jean that she would feel better if she could pay her something. Jean again declined, but said she had thought of one thing Meg could do for her. She dreamed of visiting Hawaii, but lacking the resources to go on her own, or much travel experience to speak of, she hoped that my friend might take her there for a week. As an afterthought, she also mentioned that if there was enough in Grace's estate, she might appreciate a little something when the time came. They drafted an agreement to document their conversation and filed it with Grace's important papers.
(MORE: Does America Need a Caregiver Corps?)
The trip was definitely doable and Meg was happy to have a concrete way to thank Jean. However, determining what "a little something" from the estate could mean was more challenging. Would too little insult her sister-in-law? What would be the right amount?
After suffering another fall, Grace died last month, with her daughter and daughter-in-law at her bedside. After some time to grieve, Meg and Jean will take that trip to Hawaii. As for that "little something" from the estate, Meg tried to calculate all that Jean did for Grace and apply the going wage of a local home care worker to the hours. Eventually, though, while she did come up with a dollar amount for the estate to pay out, she realized that in this situation, a formal acknowledgement of Jean's dedication to Grace was more important and the agreement helped her achieve that.