Many people are willing to voluntarily care for a parent or loved one without any promise of compensation. Even so, a growing number of people in Pennsylvania are entering into caregiver contracts (also called personal service or personal care agreements) with their family members. Having such a contract has many benefits. It rewards the family member doing the work. It can help alleviate tension between family members by making sure the work is fairly compensated. In addition, it can be a be a key part of Medicaid planning, helping to spend down savings so that the elder might more easily be able to qualify for Medicaid long-term care coverage, if necessary. Care contracts are also an important part of Veteran's benefits planning, as amounts paid under a care contract can be considered an "unreimbursed medical expense" that may help the Veteran or their widow qualify for Improved Pension benefits (Housebound pension and Aid and Attendance).
This is a much better idea and less complicated than having her pay you cash.
Payment to the caregiver can either be made with a lump-sum payment or in weekly or monthly installments. For Medicaid purposes, it is very important that the pay not be excessive. Excessive pay could be viewed as a gift for Medicaid eligibility purposes. The pay should be similar to what other caregivers in the area are making, or less.($15.00-$20.00 per hour)
Attorneys say that if set up properly, a caregiver contract shouldn't be considered as a gift to children, because the patient is receiving a true, real service in return.