Paying Family Members to Provide Care for Special Needs Individuals

new mexico estate planning and caregiver attorney

The Special Needs Alliance recognizes, paying a relative to care for a family member with disabilities can solve several challenges. This solution allows the individual requiring care to remain at home, where they likely feel most comfortable. As The Caregiver Space observes, paying a family member also acknowledges the important work they do and compensates them for the financial sacrifices they make. Caregiver duties often include tasks that assist with daily living, such as housekeeping, meal preparation, transportation of the care recipient, monitoring the recipient’s mental and physical condition, and providing companionship.

There are a variety of government programs that compensate caregivers for their work. Program eligibility depends on geographic location and the demographics of the individual requiring care. Caregivers are more likely to qualify for payment if they are providing care to a U.S. military veteran or a person who qualifies for Medicaid. However, caregivers providing care to someone receiving benefits from the New Mexico Development Disabilities Waiver must meet its requirements. Navigating this patchwork system can be challenging; however, the first step is always establishing a caregiver agreement.

A caregiver agreement functions as an employment contract between the individual with a disability and the caregiver. It is developed in consultation with an attorney specializing in special needs and/or elder law. The agreement provides the necessary legal framework and supporting documentation for the caregiver to be paid for his/her work. Each Caregiver Agreement is unique, so if there is more than one caregiver providing services, each individual should have a separate agreement.

Guidelines for a Caregiver Agreement

A caregiver could be considered an independent contractor or an employee.  If drafted as an employment contract, the Caregiver Agreement should outline the services and duties expected of the caregiver. It should define their on-and off-duty hours and vacation time. As an employee, the caregiver will be liable for all applicable state and federal income taxes. The employer should plan to make appropriate deductions, including Social Security and workers’ compensation.

In the Special Needs Alliance’s newsletter The Voice® Courtney L. Fletcher, Esq. observes that the written agreement must be in place prior to when the services begin. The care recipient should be able to demonstrate his/her need for the services. Often a doctor’s note is required to support this need. The services the caregiver performs must be necessary to the recipient’s care, and the duties defined in the agreement cannot duplicate those of any other caregiver or service provider.

The value assigned to the services provided should be fair market value. If the salary or hourly wage assigned is greater than what professional caregivers make, Medicaid or other funders are likely to determine that a portion of the funds are a “gift” or a “transfer of assets.” This sort of infraction could cause a period of ineligibility, so it is best to set a reasonable rate from the outset.

The best course of action when looking to hire family members is to have a well-executed and detailed care agreement in place prior to providing services or transferring payment. If you’re interested in learning more about caregiver agreements or how a family member could be paid to be a caregiver, contact an elder law attorney or reach out to our office by calling (505)872-0505 or email us at .