When there is more than one member of a family who agrees to support in ANY way the care of a senior family member, the preparation of this agreement in writing will serve the family well. Many families might skip this step thinking “It’ll be fine! We’re family!”.

However, consider how truly important the project of caring for someone is. A written agreement will collect ideas from all family members about care, including upfront care, cash contributions, respite for the primary caregiver, fairness of care contributions, and how to promote a core idea that everyone has a focused task. Additionally, there are some financial benefits of establishing a care contract. 

What is a Care Contract? 

This contract can go by many names: a family caregiver contract; a personal care agreement; an elder care contract; a personal services contract; or a family care contract. It is a written agreement between a caregiver or caregivers and the care recipient. Most often, they are between family members, such as an elderly parent and their adult child, however it is not required that the two individuals be related.

What are the goals of a Care Contract? 

  • To allow the family to conserve its combined energies and resources for supporting the long-term care needs of a loved one, 
  • To open up every possibility for locating and securing needed help from every available source, 
  • To document the expectations as to what care tasks are provided and by whom (e.g., bathing, dressing, medication management, house cleaning, transportation, paying bills, etc.),
  • To establish where care will be provided (e.g., in the home of the aging loved one, in the home of another family member, etc.),
  • To establish the frequency of care,
  • To make initial plans for when care needs will change, and
  • To document if there is payment for any care provided by a family member. 

Just the formation of this agreement and reducing it to writing is highly instructive and each modification is an opportunity to review the size and scope of each family member’s contribution. And, if one must withdraw, filling the gap will be less likely to prove so disruptive.

What does a Care Contract look like? 

  • Services to be Provided and Location: List all tasks and duties that are expected of the caregiver (e.g., light house cleaning, laundry, meal preparation, grocery shopping, providing transportation to medical appointments and social activities) and indicate the location in which services will be provided, such as the senior’s or family member’s home.
  • Frequency of Services: Document how often (how many days a week) and for how long (how many hours at a time) services are to be provided. The terms can be left somewhat flexible since care needs tend to change over time. For example, the contract might state, “a minimum of 20 hours per week” or “a maximum of 40 hours per week”.
  • Start Date / Length of Agreement: State the date that care will begin. Remember, it must be a future date; the contract cannot be backdated. Also, it is important to include how long the agreement will remain in effect. This may be short term, such as just a few years, or for the life of the individual.
  • Pay Rate and Frequency of Payment: If appropriate, include a rate of pay (this can’t be more than the going rate of a Home Care Aide in your area) and how often payment is rendered (e.g., weekly, bi-weekly, once a month, or lump sum).
  • Modification / Termination Clause: If the agreement is long term, it is highly recommended that the agreement be reviewed, and modified as needed and/or on an annual basis. A clause that allows for termination of the agreement is also recommended.
  • Signatures: Ensure both the care recipient and the caregiver sign the contract. Having the document notarized is not a bad idea!

How can a Care Contract help you financially?

  • If a family member is getting paid, a care contract will be important for future Medicaid eligibility. Because Medicaid has an asset limit (for most states this is around $2,000), the care contract will verify that paid funds were not gifted, rather were legitimate payment for care services. This will prevent a penalty during Medicaid’s “look back” period, which goes back 5 years. 
  • If an aging loved one is living with a family member, a care contract can verify a claim for available tax credits for those caring for aging loved ones. New credits pop up regularly.

Guest Author: Kimberly Whiter, Ed.D.
Owner and CEO of Elder Care Solutions, a mission to ensure aging and caring are as financially positive for families as possible. They work with families to educate them on their financial options for covering elder care costs and guide their navigation through the financial landscape, which can often be overwhelming for families to do alone.