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Can A Family Member Be Paid by an Aging Parent for Providing Care and Lodging?

By: Debra K. Schuster

It is not uncommon for aging parents to want to pay an adult child or other relative to provide care, run errands, or even move into the relative’s home rather than having to move into an assisted living facility or nursing home.

Even when family members promise they will never allow the aging parent to move into a nursing home, those same family members frequently do not realistically anticipate increasing care needs and the time, stress, and cost inherent in providing such care. Very often, despite everyone’s best efforts and wishes, nursing home care is needed.

A parent who wants to pay for care that family members provide must create a personal care contract that reflects the services provided, time spent providing such services, and the amount paid (which must be the fair market rate) to the family member for services provided. Payment must be made within two months of providing such services, and the amount paid is considered income to the family member receiving payment.

When a parent moves into the home of an adult child or other family member, both parties (or the legal representative of the parent) need to sign a rental agreement that specifies what is being provided – room, meal preparation, laundry, utilities, and any other goods and services that are included- as well as the amount of the rental payment. Again, the amount paid under the rental agreement is income to the person in whose home the parent is living.

Failure to appropriately document payments for this care can lead to a period of ineligibility if Medicaid nursing home benefits are needed in the future. So, even if no-one expects a loved one to have to move into a nursing home, it is better to put these documents in place than to risk jeopardizing the ability to qualify for Medicaid, if it is ever needed.

The attorneys at Paule, Camazine and Blumenthal, P.C. can advise you and your loved ones about planning and paying for long-term care, what Medicare and Medicaid pay for, and assist with applying for Medicaid.


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