Quitting Your Job To Become A Caregiver
Costs And Benefits of Becoming a Caregiver
One of your life's greatest challenges and privileges might be caring for an ill parent, spouse, or child. Being a caregiver is an opportunity to offer kindness, respect, and compassion to another. The work fosters a sense of achievement and worth. But there aren’t enough hours in the day to work full-time and be a full-time caregiver, too. So, many workers are considering quitting their “day job” to focus on family.
Being A Caregiver Is Worthwhile But Complex
You’ve been offered one of life’s biggest challenges – caring for someone you love. Whether you see this as a privilege, a challenge, or an overwhelming burden, caregiving offers an intimate connection with another person that can bring you purpose and satisfaction. The American Psychological Association says eighty-three percent of caregivers consider caregiving a “positive” experience. But that doesn’t mean it’s easy. It’s not. It’s complex.
Caregiving requires logistical planning, organization, management, advocacy, and perseverance. It’s more than aiding someone to dress, eat, or take medications. It can feel like a snowball rolling downhill, getting more complex over time, according to the Massachusetts Institution of Technology AgeLab. Caregivers manage the care receiver’s social contact with others, issues management (car repair, tree removal, sick pet), health compliance (blood pressure, medication), transportation, food shopping and errand running, health and personal care coordinator, cooking and cleaning, bathing/dressing, financial management and planning, legal planning, and health administration. As difficult as that may be to master and manage, add to that the emotional side of caregiving – dealing with anger, anxiety, boredom, embarrassment, fear, and grief, among other emotions.
Tip: Look for a professional partner or coach early on to help you navigate being a caregiver. It is complex; you need reliable, trustworthy guidance to be your best caregiver. The Life Care Planning Law Firms Association can refer you to a practitioner in your area.
What Are The Costs Of Being A Caregiver?
Caregiving has costs- lost time at work, loss of recreational time, stress and frustration, family conflict, depression, sleep deprivation, and lack of self-care. It’s true that caregivers often neglect their care needs, skip annual checkups, and don’t make time for exercise, nutrition, or proper sleep. Forty-eight percent of unpaid caregivers in Tennessee have been told that they have one of the following: heart disease, stroke, asthma, cancer, COPD, arthritis, depression, kidney disease, or diabetes, according to the CDC study “Caregiving for Family and Friends – A Public Health Issue.
There are economic costs as well, and they might surprise you. In 2021, AARP found that, on average, a typical unpaid caregiver spent $7,242 (or 26%) of her own income when providing care for another. Women, on average, spend more unpaid time caregiving, lose more time at work, and have jobs requiring them to take unpaid leave or change their shifts due to caregiving.
Legal Aspects Of Being A Caregiver – Use A Caregiver Agreement
In Tennessee, our law presumes that care is provided out of a sense of love and affection and that it is unpaid. However, suppose the parties enter a Caregiver Agreement, also known as a “Personal Services Agreement,” before care is rendered. In that case, a parent can pay a relative or child to provide care. The contract should be drafted by an attorney knowledgeable in elder law. It may cover providing care, compensation, living arrangements, sharing expenses, health care advocacy and coordination, bill paying and financial management, and move management. Compensation should be competitive with what the care receiver would pay for a similar service within the community. Invoices and copies of checks should be maintained. Because the care receiver is now an employer, wages paid should be reported to the IRS, payroll taxes withheld and reported, and a w-2 provided for tax purposes at the end of the year. For an in-depth discussion of wage and hour, tax, and insurance issues when hiring in-home care, consult this excellent 2-part article by John L. Roberts, CELA, Sustainable Home Care, Part 1 and Part 2 in the NAELA News (2018).
Remember, the Caregiver Agreement differs from a durable power of attorney, which is also an essential tool for elder care planning because the Caregiver Agreement defines the scope of services and compensation for the caregiver/receiver relationship. The Durable Power of Attorney, on the other hand, is the document the care receiver signs to empower another person (maybe the caregiver or maybe another person) to act on their behalf in legal decisions and transactions.
Payments to caregivers must be appropriately reported and should not be in gifts, viewed by our Medicaid agency, TennCare, as disqualifying transfers resulting in penalty periods during which no benefits are provided to the person needing care. Remember, Medicaid has a 5-year lookback period. Any gifts made by the care recipient within five years of application for benefits will result in a penalty. In 2023, every $6,852 in gifted funds results in a calendar month of disqualification from nursing home benefits in Tennessee. Contrast that result with that money paid to a caregiver under a valid Caregiver Agreement is not penalized and is a permitted expense for spend-down purposes.
Other Little-Known Benefits of Being A Caregiver – Caregiver Child Exception
Under federal and Tennessee law, if a child resides with a parent in the parent’s home for two years before the parent applies for Medicaid/TennCare, the parent can gift their home to the caregiver-child. This transfer is exclusive to the child of the care receiver. It is called the Caregiver-child Exception, and here’s how it works.
The parent cannot live independently, and the state of Tennessee agrees that it is less expensive to reside at home with a child, which is probably a preferred situation for the parent. So, the state incentivizes a child to move in and assume responsibility for the parent’s care. After the child has handled care as a live-in caregiver for two consecutive years, the parent can apply for Medicaid or TennCare and gift the parent’s home to the caregiving child. This transfer is not subject to the 5-year lookback period and should not result in any penalty in eligibility. Tennessee requires proof that the child resided in the property with the parent (driver’s license, tax returns, utility bills, etc.) and medical evidence from the treating physician affirming that the care was required for the parent for the two years.
A note of caution: be careful about tax consequences associated with transfer of the home. If the house is gifted to the child by deed during the parent’s life, the child will receive the parent’s basis in the property. If the child sells the home within the next two years, the child will owe capital gains tax based on the fair market value of the sale minus the parent’s basis, which could result in substantial gains and taxes due.
Conclusion
If you’re considering becoming a full-time caregiver and leaving the workforce, be organized and understand the good and bad consequences that can arise. Get the tools you need – comprehensive legal documents, a plan for the near-term future, and a knowledgeable guide. A Life Care Plan with Elder Law of East Tennessee provides all this and more. To learn more about our services and how we can help, please give us a call.
Knoxville Office | 865-951-2410
Johnson City Office | 423-301-6551
