Special Rules for Caregiving Children
Many adult children are giving their all to keep their parents out of a nursing home, and they are doing it out of love, without any thought of compensation. This is very admirable, and often it consists of hours and hours of time spent doing housekeeping, monitoring medications, cooking meals, doing laundry, and giving companionship. For millions of such care giving children, the last thing they would think about is getting paid for that time, and they would feel guilty just thinking about getting paid.
There are special rules, however, for Title 19 (Medicaid), and the Veterans Administration Aid & Attendance Program, that are designed to help keep that parent at home, and encourage children to give that care.
First, Medicaid will allow a child to be paid for the care being given, if the parent misses activities of daily living, such as being able to bathe, dress, eat, or monitor and take their own medications, without help. But Medicaid will not permit this unless there is a written contract in place between parent and child, and the care is paid for at the going rate that homecare businesses would charge. For example, if a home health aide earns about $19 per hour, a child can be paid at that rate. A companion is about $10 per hour. With a properly written care contract, and with doctor's notes supporting the need for care, a sizeable amount of money can be transferred as these hours add up very quickly. Without that written contract, the State of Connecticut will treat the money transferred as a gift (an uncompensated transfer of assets) that results in a penalty causing ineligibility for Medicaid benefits.
Second, if a parent misses three or more activities of daily living, supported by the parent's doctor's records, and if the parent lives with the child, in either the parents' home or the child's home for two continuous years, and if that care was necessary to keep the parent out of a nursing home, there is a very special rule called the "Caregiver Child Rule". That rule allows the parent to transfer his or her house to the child without any penalty. And that does not require a written contract. It is surprising how many people qualify for this. But the caregiver must be a child, not a grandchild or other relative, and the medical records must clearly support the facts that the parent would have been in a nursing home for two years, without the care provided by the child.
Third, there is a similar rule for the two years of continuous care living with a parent in cases where the parent does not own a home. That rule, often called "Other Valuable Consideration", has the same requirements as the caregiver child rules, but allows transfer of money to the child, up to the average cost of a nursing home in Connecticut, which the State currently says is $10,366 per month. That is over $240,000 for two years of care.
For all those numerous children who would feel funny about acquiring money from their parent for care, there is a very clear reason why it can be very advantageous to the parent. If the child has received funds, the child can always save those funds in case the parent needs more care than Medicaid will pay for.
For example, since Medicaid will not pay more than $5,600 per month for care at home, and if the parent needs $7,600 a month to stay at home, the child is sitting on a very valuable nest egg to pay the extra $2,000 a month and supplement the Medicaid, and thereby keep the parent at home and out of a nursing home.
There are many other aspects of such rules such as taxes and other considerations that cannot be explained in an article of this length. For that reason, it is wise to review beforehand the special rules for care-giving children with someone who knows the rules and who has experience in how those rules are implemented by the Department of Social Services. Doing things right, can be the difference in keeping a parent at home instead of being forced into a nursing home, but in the event a nursing home is a must, can save the family home.