You may wonder, “can I employ my daughter if she is living with me?” According to the National Bureau of Labor Statistics, there were over 3 million personal care aides and home health aides in the labor force in 2018, the most recent year for which data are available. In the State of New Jersey, over 41,000 people were employed in this occupation. AARP’s 2016 national survey of community caregiving found, among other things, that out of pocket costs (financial strain) on family caregivers averaged 20% of their income, with costs to care for a person over 50 or with dementia about 40% higher. The AARP 2017 survey report of family caregiving in New Jersey showed that there were over 1 million people providing some level of hands-on care to a family member. Nationwide it’s been estimated that 40 million people are engaged in family careiving.
In these difficult times as COVID-19 spreads rapidly, people are losing their jobs and in some cases, moving home with parents. The Centers for Medicare and Medicaid Services (CMS) has issued guidelines on home care, but still it is becoming difficult to set up in-home care plans due to uncertainties about exposure. If a family member is providing hands-on care, this might be a good time to look into formalizing that employment arrangement. A well-structured care plan can enable a frail or disabled person to stay at home with the assistance and support of family members. This is the care that assists them with the Activities of Daily Living (“ADLs”)– bathing, dressing, use of the bathroom, feeding, ambulation, and transferring from bed to chair – or which provides the on-site supervision to assure safety. Home care workers are generally classified as employees by the IRS, so there will be income tax ramifications. 2020 IRS Publication 523 regarding Sale of Residence and Capital Gains TaxBut there are benefits from formal employment along with the obligations.
If a family caregiver hasn’t been in the workforce, creating a formal employment arrangement could position them for eligibility for Social Security and Medicare, State unemployment, and state temporary disability, among other things, if the employment ends Additionally, should the elder (the patient/employer) have to apply for Medicaid/MLTSS to pay for long-term care, having a formal employment arrangement could prevent certain problems that arise such as transfer penalties with family caregivers.
If Medicaid benefits will be useful and appropriate, the elder parent may want to apply for home care services through the NJ Medicaid Long Term Services and Supports program (MLTSS). Although the application process can be grueling, once approved, you can consider using the Medicaid benefits to pay your family caregiver through the Personal Care Assistant option of MLTSS.
Call us to discuss family caregivers, employment contracts, estate plans and Medicaid. We have special procedures in place to conduct legal consults by phone and to help you sign your documents in a way that minimizes exposure …. 732-382-6070.