Featured Research

from universities, journals, and other organizations

Contracts Adding Legal Twist To Family Health Care

Date:
May 27, 2009
Source:
University of Illinois at Urbana-Champaign
Summary:
Financial contracts to care for sick or aging relatives -- nearly unthinkable just a decade ago -- are drawing new interest as everyday Americans wrestle with the time and expense of providing long-term health care, a legal expert says.

Financial contracts to care for sick or aging relatives – nearly unthinkable just a decade ago – are drawing new interest as everyday Americans wrestle with the time and expense of providing long-term health care, a University of Illinois legal expert says.

Law professor Richard L. Kaplan says the rise in so-called family caregiver agreements is far from a groundswell, and most people still bristle at the notion of being paid to care for parents or other relatives who may have once cared for them.

“To most, the idea is abhorrent because they consider this a family responsibility,” said Kaplan, whose research on caregiver agreements appears in the current issue of the Canadian Journal of Elder Law. “I’m not sure I’ve seen anyone who has reacted positively on the first or even second hearing.”

But he says more Americans are considering the agreements as a result of tougher standards imposed three years ago for Medicaid, a government program that covers nursing homes and other long-term health care costs after older Americans exhaust their own assets.

Under the change, officials now look back five years rather than three to see whether Medicaid applicants gave away homes or other assets that could have paid for their care.

If so, the government assesses a stiff penalty that denies Medicaid coverage for the amount of time the gifts would have covered health-care costs. For example, if a patient in a nursing home costing $5,000 per month gave her daughter a residence worth $200,000, the penalty period would be 40 months.

But there are no penalties if the assets are part of a family caregiver agreement, making them payments for services rather than a gift, said Kaplan, an expert on elder law and a member of the National Academy of Social Insurance.

“The biggest motivator for these agreements is the transfer of assets penalty, and that will only grow if the Obama administration implements its proposal to expand the look-back period from five to seven years,” he said. “I think very few Americans would consider family caregiver agreements were it not for Medicaid.”

Kaplan warns that the agreements have a major down side. Written agreements to provide services for pay – whether an hourly rate or the deed to a house – make the compensation taxable.

“That’s a tremendous negative – so tremendous that for most Americans it’s the end of the discussion,” he said. “After all, if they provide care on a casual basis and then get an inheritance when their relative dies, this money would be tax free.”

But Kaplan says agreements can also limit tax consequences if the Internal Revenue Service ever challenged an inheritance by claiming that the funds stemmed from services provided to the deceased. Without an agreement, the entire value of a bequeathed home could be taxed, as opposed to only a portion if a contract outlined the scope of hours and rates.

He says the contracts are a byproduct of changing family dynamics that have made caring for aging relatives more challenging than it was a generation ago. Fewer children, often spread around the country, are left to care for parents now living longer.

In addition, more two-worker households mean family caregivers may have to sacrifice pay, health insurance and retirement benefits – losses that can be at least partially recouped through a family caregiver agreement, Kaplan said.

“These agreements put more formality into what has typically been a very informal arrangement,” he said. “For caregivers, it lays out their responsibilities and what they will receive for their efforts. For the older person, it specifies the care that he or she can expect from the caregiver.”

Kaplan says hours, duties and other components of the agreements are worth considering as families explore long-term care options, even if they plan to provide care informally rather than through a contract.

“It’s always better to address potential problems up front rather than after the fact,” he said. “For example, who will pay for equipment like a hospital bed? Is the caregiver expected to be available 24 hours a day? What happens if the care needs of the older relative increase beyond what the caregiver is able to provide? How are vacations to be handled? Answering these types of questions may show you need a different, non-family solution.”


Story Source:

The above story is based on materials provided by University of Illinois at Urbana-Champaign. Note: Materials may be edited for content and length.


Cite This Page:

University of Illinois at Urbana-Champaign. "Contracts Adding Legal Twist To Family Health Care." ScienceDaily. ScienceDaily, 27 May 2009. <www.sciencedaily.com/releases/2009/05/090527130840.htm>.
University of Illinois at Urbana-Champaign. (2009, May 27). Contracts Adding Legal Twist To Family Health Care. ScienceDaily. Retrieved September 21, 2014 from www.sciencedaily.com/releases/2009/05/090527130840.htm
University of Illinois at Urbana-Champaign. "Contracts Adding Legal Twist To Family Health Care." ScienceDaily. www.sciencedaily.com/releases/2009/05/090527130840.htm (accessed September 21, 2014).

Share This



More Health & Medicine News

Sunday, September 21, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Sierra Leone's Nationwide Ebola Curfew Underway

Sierra Leone's Nationwide Ebola Curfew Underway

Newsy (Sep. 20, 2014) Sierra Leone is locked down as aid workers and volunteers look for new cases of Ebola. Video provided by Newsy
Powered by NewsLook.com
Changes Found In Brain After One Dose Of Antidepressants

Changes Found In Brain After One Dose Of Antidepressants

Newsy (Sep. 19, 2014) A study suggest antidepressants can kick in much sooner than previously thought. Video provided by Newsy
Powered by NewsLook.com
Could Grief Affect The Immune Systems Of Senior Citizens?

Could Grief Affect The Immune Systems Of Senior Citizens?

Newsy (Sep. 19, 2014) The study found elderly people are much more likely to become susceptible to infection than younger adults going though a similar situation. Video provided by Newsy
Powered by NewsLook.com
Jury Delivers Verdict in Salmonella Trial

Jury Delivers Verdict in Salmonella Trial

AP (Sep. 19, 2014) A federal jury has convicted three people in connection with an outbreak of salmonella poisoning five years ago that sickened hundreds of people and was linked to a number of deaths. (Sept. 19) Video provided by AP
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins