There’s little work more valuable than keeping an aging parent or loved one safe and comfortable in their final years. But as a society, we’ve resisted assigning an actual dollar value to this care. Instead, we’ve developed the belief that elder care is a duty we should willingly volunteer for as adult children (or other family members); a labor of love that should be our honor to provide. How could we possibly assign a dollar value to that?

I’ll tell you how: Add up the hours a family caregiver spends providing care. Multiply that by a living hourly wage. Factor in reimbursements for out-of-pocket expenses such as caregiving supplies, durable medical equipment, home modifications, groceries, prescriptions, and mileage to and from appointments and/or errands.

Wait, let’s make it easier: We can just call a home care agency in our local area and ask what their hourly pay rate is for a full-time, in-home caregiver. The care we give is worth at least that much. Remember, we’re not just providing assistance with activities of daily living (ADLs). We’re also in charge of medication management, health care team coordination, financial management, and more.

At the beginning of our journey through caregiving, these duties might steal away some of our spare time. Gradually, they eat into our work days, causing us to miss hours or days of work at a time—and possibly the pay associated with that missed work. Eventually, they may consume our days and nights, forcing us to leave our jobs and dedicate ourselves entirely to caring. And well after the death of our loved ones, the reduced income, earning potential, and social security contributions we weren’t able to make will continue to take their toll on our financial picture in retirement. If you're still unsure about getting paid, here are four reasons family caregivers deserve to get paid.

Everyone who agrees that all of that has very real financial value should take a look at the ways that some family caregivers can receive compensation for the care we provide.

Government Programs That Pay Family Caregivers

Two key government programs that pay family caregivers for the senior care we provide are Medicaid and the U.S. Department of Veterans Affairs (VA). Eligibility for both programs is limited to certain Americans. 

Medicaid

Most of us are at least vaguely familiar with Medicaid. This is a program that helps cover medical costs for some people with limited income and resources. Each state runs its own Medicaid program, so eligibility requirements and benefits can vary from state to state. But the federal government has general rules that all state Medicaid programs are required to follow.

It’s important to note that Medicaid and Medicare, though they’re both run by a federal agency called the Centers for Medicare & Medicaid Services, are not the same thing. Here, we’re only talking about how family caregivers can get paid through the Medicaid program. Because while Medicare does cover home health care services which are provided by a skilled nurse or therapist, it does not cover home care which is provided by “unskilled” caregivers (what an unfortunate description of these amazing people).

All state Medicaid programs provide long term care services to aging adults who meet their eligibility requirements. But each state sets its own eligibility requirements. And each state determines the long term care services it will cover.

For our aging loved ones to meet their state’s eligibility requirements, they will have to spend down all or most of their savings and assets prior to entering the program. This means any savings, investments, property, etc. they had set aside for themselves or as a potential inheritance for their children will have to be used to pay for healthcare services before they can start receiving Medicaid services for free or at a reduced cost. And if they have any form of income (eg: pension, social security) they’ll have to use that to pay for Medicaid services. We may be able to set aside some of their money in an irrevocable trust that can’t be touched by Medicaid. It’s wise to talk with an accountant and elder attorney about this strategy.

States may also base eligibility for family caregiver payment on our loved one’s level of care needs, our relationship to that loved one, and our own income level.

Now, while all state Medicaid programs will pay for long term care, some will only pay for it if it’s delivered in a nursing home setting. Other states have Medicaid Waivers that allow people with particular needs and health conditions to receive healthcare at home or from a community-based provider instead of in a care facility. And some of these states with Medicaid Waivers pay the family member to provide the in-home care.

Family caregivers considering going the Medicaid route in hopes of getting compensated for the care we provide to our aging family members have a bit of homework to do. We need to make sure we understand what kind of long term care the Medicaid program in our loved one’s state covers, who the program will pay to deliver that care, and what the program’s eligibility requirements are. We can start our research by googling “Medicaid Eligibility for [state].” It’s helpful to speak with an elder law attorney about this, too.

VA benefits

The VA has several programs that pay adult children, relatives, and sometimes spouses who are taking care of older or disabled veterans, including those who are living with Alzheimer’s and other dementias. These programs give veterans a flexible budget or cash allowance they can use to hire their own care providers—including family members.

There are four different VA programs that pay family caregivers. You can read about the different eligibility criteria for the care recipient and the caregiver below. The American Legion offers services to help veterans and their families understand and apply for these VA benefits.

Aid and Attendance Pension Benefit (A&A)

Here, the veteran or surviving spouse who requires long term care can receive a monthly cash allowance which they can use at their own discretion, including to pay for in-home care provided by certain family members. And the cost of paying for this care can be deducted from the care recipient's income, making it easier for them to come in under the income limit to qualify for this program. 

The veteran or surviving spouse must be eligible for the basic VA pension or the basic survivor pension in order to qualify for A&A. They also must require assistance with activities of daily living (ADLs) and/or have a diagnosis of Alzheimer’s disease. ADLs include bathing, grooming, dressing, meal prep, and medication management. Important to note that a spouse cannot be paid to provide care in this program.

Housebound Pension Benefit

This is another monthly cash benefit that requires the veteran or surviving spouse to be eligible for the basic VA pension or the basic survivor pension. If our loved one is unable to leave their home due to a permanent disability, they may be eligible to receive a monthly cash benefit they can use to hire a friend or relative other than a spouse to provide in-home care.

Program of Comprehensive Assistance for Family Caregivers (PCAFC)

This program is for veterans who were critically hurt or had a serious illness in the line of duty, and are enrolled in the VA’s health care program. They must have a VA disability rate of at least 70% (individual or combined) and require at least six months of personal care services due to an inability to complete at least one ADL and/or require supervision.

Family caregivers can receive monthly cash benefits through this program, as well as opportunities for education, training, counseling, and up to 30 days of respite care per year.

Veteran Directed Care (VDC)

This pilot program is currently available to veterans in 43 states, Washington DC, and Puerto Rico. Eligible veterans must be enrolled in the VA’s medical benefits package and require skilled services and assistance with ADLs. Here, the veteran receives a monthly budget to pay for the care they need, be that medical equipment to help them remain independent (eg: a walker) or a caregiver, including adult children, grandchildren, spouse, or other relatives. 

It's important to understand that the veteran doesn't receive cash through this program. They receive a budget, and work with a financial management service that makes payments for care and services.

States that currently offer Veteran Directed Care:

• Alabama
• Alaska
• Arizona
• Arkansas
• California
• Colorado
• Connecticut
• Florida
• Hawaii
• Idaho
• Illinois
• Indiana
• Iowa
• Kentucky
• Louisiana
• Massachusetts
• Maryland
• Maine
• Michigan
• Mississippi
• Missouri
• Montana
• Nevada
• New Hampshire
• New Jersey
• New Mexico
• New York
• North Carolina
• Ohio
• Oklahoma
• Oregon
• Pennsylvania
• Puerto Rico
• South Carolina
• South Dakota
• Tennessee
• Texas
• Utah
• Virginia
• Vermont
• Washington
• Washington DC
• Wisconsin
• Wyoming
  

Navigating government benefits can be overwhelming, confusing, and time-consuming. The application process involves extensive documentation, forms, and bureaucracy. It can take months to find out if a claim is approved. And the benefits may only cover a portion of actual caregiving costs. But a portion is better than nothing at all. So it may be worth it to find out if a loved one is eligible for Medicaid or a VA benefit.

RELATED: Government Programs for Older Adults and their Family Caregivers

Insurance Products That Pay Family Caregivers

If an older family member has a long term care policy or a life insurance policy, we may be able to leverage that to cover our caregiving expenses, and even get compensated for our time spent providing care. 

Long Term Care Insurance

Some long term care insurance policies (LTCI) reimburse family caregivers for assisting with ADLs and providing some medical care. But many policies only pay “formal caregivers.” These are paid professionals, who likely have completed caregiver certification training. And some policies are even more restrictive, requiring the home care to be provided by a formal caregiver who is employed by or contracts with a home care agency.

If our loved one has an LTCI policy, and meets the policy’s requirements to claim reimbursement for home care expenses, we need to check to see if the policy covers “informal caregivers.” That’s how they usually refer to family caregivers. If they do, we can call the insurance company or our insurance agent to find out what we need to do to start receiving compensation for the care we’re providing. 

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Speaking of LTCI, now might be a good time for all of us to consider purchasing our own LTCI policy for our future care, if we haven’t done so already. If we want to be able to pay our family member(s) to care for us, we need to make sure to choose a policy that pays informal caregivers.

A lot of people are put off by the cost of LTCI—only about 3% of Americans own a policy. But remember, we don’t necessarily have to buy the most comprehensive policy for our family to benefit. Even if we purchase a one that only covers half or a quarter of the cost of our care when we’re older, it will take a bite out of our (and our family’s) care costs. For more details about getting compensated via LTCI, read our article titled, Family Caregiver Compensation: Long Care Insurance.

Life Insurance Accelerated Death Benefit

Some life insurance policies offer this benefit that allows someone who has been diagnosed with a terminal illness to access a portion of their death benefit while they’re still alive. This means their beneficiary(ies)—possibly us—will only stand to receive the unused portion of the benefit after our loved one dies.

How does this help us? It can infuse some much needed cash into a dwindling care budget. And it’s cash our loved one can use any way they want, including paying us for the care we provide. This might be something to consider when a loved ones’ LTCI policy runs out, but we want to protect as much of their savings and assets as possible.

Life Settlement or Viatical Settlement

These aren’t insurance products, per se. They’re actually investment tools that, for lack of a better word, bet on the payout from someone’s life insurance policy. Basically, the owner of a life insurance policy can sell their policy to a third party for less than the policy’s death benefit (the total amount that their beneficiaries would receive upon their passing). The seller benefits from the proceeds of the sale while they’re still alive. The buyer stands to receive the full payout from the insurance policy upon the original owner’s death. These could be options to consider if a loved one’s life insurance policy doesn’t allow them to access some of its cash value while keeping the policy in force for beneficiaries, eg, via an accelerated death benefit. 

A life settlement is generally used by an older adult who’s fairly healthy. A viatical settlement would be used by someone with a terminal illness, and therefore a shorter life expectancy. Like the life insurance accelerated death benefit, either one of these settlements can prop up a care budget, and our loved one can use the proceeds to pay us for the care we provide. Prospective buyers can be found by googling “life settlement companies” and “viatical settlement companies.” It’s wise to talk with your accountant about these options, as there may be tax implications.

Personal Care Agreement

If our family agrees to pay one or more family members to provide care to an aging loved one, we can draw up a legally binding document called a Personal Care Agreement. This lays out the duties and responsibilities of the caregiver and the compensation that the family will pay to the caregiver. The compensation should be based on the going rate for professional care in our area. And we can only be compensated for care provided after the agreement is signed. 

We can work with an elder attorney to draw this up, or draft it ourselves. Per the Family Caregiver Alliance, a Personal Care Agreement (also called a long-term care personal support services agreement, elder care contract, or family care or caregiver contract) should include the following:

• Date the care begins
• Detailed description of services to be provided (eg: driving to medical, dental, adult day care, and other appointments, food preparation, medication management, etc.)
• How often services will be provided (eg: “no less than 20 hours a week” or “up to 80 hours a month”)
• How much and when the caregiver will be compensated (weekly or biweekly)
• How long the agreement is to be in effect (eg: one year,  two years, or for the duration of the care recipient’s lifetime)
• A statement that the terms of the agreement can be modified only by mutual agreement of the parties in writing
• The location where services are to be provided (eg: care recipient’s home, caregiverʼs home, other location. Allow for the location of the care to change in response to increasing care recipient needs.)
• Signatures by the parties, date of the agreement

This arrangement works well when everyone involved sees caregiving as valuable work, and the family has the means to compensate the family caregiver(s). The funding can come from the care recipient, siblings, or other family members. 

If our loved one is paying us for care under a Personal Care Agreement, the document will be especially helpful if, at some point, they qualify for long term care via Medicaid. Remember, to qualify, they will have to spend down most of their assets on health care.

During the application process, the state will look back over all of our loved one’s financial activity for the 5 years leading up to their application—this is known as “The 5-year Look-back.” And when they see money regularly leaving our loved one’s bank account and entering ours, red lights will start going off. The Personal Care Agreement will show the state exactly where the money is going and for what kind of services. We should also keep a detailed accounting of the hours of care we provide, costs we incur, and the amount our loved one pays us. Otherwise, we may have to give any money they pay us during the 5-year look-back to Medicaid to help cover their long term care expenses through the program. It’s very helpful to talk with an elder lawyer when considering a Personal Care Agreement. 

Paid Family Leave

We understand balancing work and caregiving responsibilities can get overwhelming, which may cause us to look into paid family leave options. Eleven states and Washington DC have enacted paid family and medical leave laws. And four more states have paid leave laws coming online by 2026. These laws allow eligible residents or workers in the state to continue to receive all or a portion of their income if they have to miss work to care for a family member with a serious health condition. They’re enforced by each state and vary in terms of eligibility requirements, wage replacement, leave duration, and definition of “family member.” You can find out about your state's family leave laws on our Family Leave resource.

Fewer than 30 percent of all employees in the country have access to family leave benefits through our employers. A chat with our HR departments can help us understand what’s available for us.

While paid family leave doesn’t offer a long-term solution, it may buy us the time we need to get one of the solutions above set up. Also, if we have enough family members who are willing and able to share caregiving responsibilities, we could stagger our paid leaves over time to ensure uninterrupted care for our loved one. 

The truth about financial assistance for family caregivers is that it’s there for some families with low incomes. And it’s not really needed by families with higher incomes that can afford to pay for care out of pocket or via LTCI. But there’s a large group of family caregivers in the middle—in fact, it’s called “The Forgotten Middle”—that can’t access compensation for the valuable care we provide.

At RubyWell, we’re paving a path to financial stability for all family caregivers. Our Family Leave Finder provides state-by-sate info on family leave laws. Soon, family caregivers will be able to make the most of a loved one’s health insurance benefits with our Medicare Advantage Benefits Navigator. And ultimately, we're developing compensation solutions so that every family caregiver can be a paid caregiver. If you’d like to be among the first to hear about future products, join our waiting list.

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