Tess Vigeland: Millions of caregivers in this country look after an older family member. The AARP wanted to put a price tag on that service, and four years ago released a survey putting the value of family caregiving at a whopping $375 billion a year. But a growing minority of family members are actually being paid to do the job.
Ashley Milne-Tyte has the story.
Ashley Milne-Tyte: David Fowler and his wife take care of his 94-year-old mother Mary Ruth, a retired teacher. She was widowed in the ’60s and lived on her own until a few years ago. But when her eyesight started failing, they moved her from Indianapolis to their home in Ogallala, Neb.
David’s preparing his mom an afternoon shot of caffeine.
David Fowler: Unlike most of the people who come from Indiana, who like colored water, she likes strong coffee.
He heads up to her room on the second floor,
David: Room service!
Mary Ruth Fowler: Oh my goodness!
David: There’s your espresso.
Mary Ruth: Very good.
Mary Ruth: Mmm-hmm.
David: Make your day.
Mary Ruth: Yes, indeed.
Mary Ruth is blind now but she’s still pretty self-sufficient. She climbs the stairs and dresses herself, although David and his wife Gloria lay out her clothes. She’s started showing signs of dementia, so they’ve taken her pills into their room and they make sure she takes what she needs, when she needs it.
David says it’s a joy to care for his mom. And he’d do it for free — but he doesn’t. Mary Ruth pays her son $1,000 a month. It was his brother’s idea.
David: At first, we were kind of uncomfortable with what he was talking about, because I don’t want to make a profit off of my mother, that’s just not in our way of thinking.
But the money is welcome. David will turn 70 next month. He and his wife both work part-time. For years, they owned a photo studio in town and plowed everything they made back into the business.
David: Well, as it turned out, digital really killed the small mom-and-pop portrait studio and our business was worth maybe half of what we had anticipated when we sold it.
Some of his mother’s payment goes towards running the house, the rest goes into savings. Everyone in the family wanted the arrangement. Nothing was put in writing.
Howard Krooks: Any client that I would counsel would not simply do it informally.
That’s Howard Krooks, a lawyer who specializes in elder law. He’s drawn up dozens of personal care contracts for family caregivers, and his business is growing. Krooks says it’s about protection. There may come a time when the older person has to go into a nursing home, has very little money left and should qualify for assistance from Medicaid. But there’s a catch.
Krooks: The monies that you paid to the family caregiver, absent an agreement in writing, will be deemed to have been gifted by you to the family caregiver, causing a period of delay wherein which you will not qualify for the Medicaid benefit.
In other words, Medicaid may not pick up the tab for months — or years — because it looks on those dollars as money you could have saved to pay for your care.
Elinor Ginzler of AARP says people don’t realize how fast their money can disappear.
Elinor Ginzler: If you do in fact go into a nursing home, two-thirds of people who are in nursing homes started out as private pay but ended up going through all of their resources and end up applying for that public assistance through the Medicaid program.
She says that’s why it’s important to have a signed contract before a family caregiver starts the job. Medicaid sees that as an employment agreement. And the contract should include all the details: Exact duties, working hours and compensation. And yes, both sides will have to pay taxes and Social Security.
But that may be the easy part. Money is famous for causing family feuds. Howard Krooks has seen arrangements fall apart because one relative hated the idea.
Krooks: They were frankly looking to have another family member provide the services in an unpaid manner, so that more money could be left in the estate and hopefully, when the parent died, they would get more money.
That’s not a problem in the Fowler family. For one thing, there’s not much of an estate to leave. For another, everyone gets along, even if David teases his mother about the family hierarchy.
David: You always loved me best.
David and Mary Ruth laugh
Mary Ruth: That’s what all three of you say. But there’s no good, better and best in this family. They’re all best, at least to me.
They just take things day by day: Enjoying a joke, a glass of wine and each other’s company.
I’m Ashley Milne-Tyte for Marketplace Money.
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