National Family Caregivers Month, celebrated in November, is over —and before you ask, ‘Who knew?’, read on. December follows with the annual Home for the Holidays Campaign, on behalf of the nation’s Aging Network—and this year, to help navigate these challenging times the focus is on directing older adults and family caregivers to the nation’s aging programs.
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Over 40 million Americans are unpaid caregivers for family members. The majority are women—often, an adult daughter who lives closest to an aging parent starts out helping with daily activities. As the parent/care recipient requires more assistance, the daughter cuts back on work hours– risking her own financial security. Women over 50 who leave the workforce to care for a parent lose an average of almost $325,000 in wages, future Social Security benefits, and retirement assets. Cutting hours or leaving a job may mean buying health insurance, while also paying for caregiving-related expenses—like medications and gas for driving Mom to doctors. It all adds up. Research finds annual unreimbursed out-of-pocket expenses average $7,000.
But there may be another way for families to plan and handle caregiving: starting with a family meeting to draw up a family care agreement. Putting the issues on the table can make it better for the caregiver, as the siblings consider what their unpaid sibling may be sacrificing, and what action is needed to fairly protect her finances.
A family care agreement- also known as a personal care agreement -is a written agreement that describes the duties the family caregiver will handle and how they’ll be paid or accommodated by the family. Even if an elder law attorney is not involved, it is considered a formal contract. Depending on family dynamics, Mom (or whoever the care recipient is) may be included in the advance planning. A straightforward fact sheet is available with suggestions for the terms of the agreement, such as an “escape clause” if the caregiver or other family members decide in coming years that the arrangement isn’t working, and want to end it.
Providing for the caregiver can include paying for healthcare premiums, plus other job benefits like paid vacation and sick days. Families can determine the local hourly wage by consulting the Eldercare Locator, sponsored by the Administration on Aging, which puts individuals in touch with local aging services and resources. Because the family care agreement can designate the caregiver as an independent contractor, the family can include funds to start an individual retirement account (IRA), such as a Simplified Employee Pension (SEP). While it can seem strange for a parent and child, or siblings, to draft and sign a formal arrangement –it rewards efforts on behalf of the family, and guards against burn-out and long-term resentment.
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Have the caregiver keep records of hours of work and expenses: Not only is a log a fair way to uphold the caregiver’s end of the agreement, but the records will be essential if the person receiving care later needs to apply to Medicaid for help paying for institutional care. These records will show that the money paid to the caregiver was for legitimate expenses.
Caregivers may need a workshop in managing finances: often the caregiver’s financial responsibilities evolve from simply paying bills to filing taxes and managing assets for the parent/care recipient. They’ll probably also have to deal with Medicare or Medicaid, choosing options and a drug plan. Later, they may need to perform executor duties, and work with a lawyer on probate matters.
Observation: A former Director of the Michigan Office of Services to the Aging once remarked, “Trying to find long-term home care and community-based services for an aged or disabled family member is like being on the Starship Enterprise. Each family feels it needs to go boldly where no one has gone before – with millions of families on the same journey – one at a time.” But the truth is, there are actually many resources out there to help all families – if only people were familiar with these programs.
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