A family caregiver agreement (also called a personal care agreement) is a legal contract between a family member providing care and the person receiving care. It formalizes compensation, duties, and expectations.
10 steps across 2 sections
1. Steps Process
- Discuss with the family — Ensure all family members understand and agree to the arrangement.
- Define services — List specific caregiving duties: meals, transportation, medication management, bathing, housekeeping, companionship, medical appointments.
- Determine fair compensation — Research local home care agency rates ($15-$30/hour) for comparable services.
- Draft a written agreement — Include: parties, services, schedule, compensation rate, payment schedule, duration, and termination terms.
- Have it reviewed by an elder law attorney — Ensures compliance with Medicaid rules and tax law.
- Maintain records — Keep timesheets, payment records, and service logs.
2. Key Details
- Medicaid look-back: Without a proper agreement, payments to a family caregiver may be treated as gifts and trigger Medicaid penalty periods
- Tax implications: Caregiver income is taxable; the care recipient may owe employment taxes
- Fair market rate: Must be reasonable (not inflated to transfer assets)
- Written agreement is essential — verbal agreements create Medicaid and tax problems
Pro Tips
- Set up before Medicaid planning is needed
- Keep detailed time logs and payment records
- Consider having a professional geriatric care manager assess the care recipie...
- Review and update the agreement as care needs change