Caregivers Need to Start Early With Keeping Good Financial Records
Mom calls with the news that Dad's in the hospital. She's with him as he rests and waits for tests. Could you meet her there and brings some things for Dad's room?
Of course! You rush out from work, stop at the drug store and get toiletries your Dad uses, stop by the department store and grab some pajamas, a robe and slippers. He'll likely be in one of those dreadful gowns, but your instincts say, "Make Dad comfortable." You grab your purchases and rush to the hospital to join Mom.
Did it enter your mind to keep those receipts from the purchases made for Dad? Of course not. You're just doing what comes naturally. You are thinking of your parents and their comfort.
Well, that round of purchases isn't going to break the bank. However, then you find out that Dad needs heart surgery. You keep running errands and picking up the items your parents need. When Dad goes home, you help Mom by staying with Dad, but you also help by running errands. You keep picking up what they need and paying for the items when you pay for your own purchases.
Sometimes, Mom asks how much you spent on them and then writes you a check. Sometimes she never gets around to it. It's all very informal and you don't worry too much.
Then, long-term care comes into play. Mom is getting frail, Dad moves to a nursing home, you are running yourself ragged. Mom eventually goes into assisted living. Their money is fast dwindling. They eventually spend down their savings and qualify for Medicaid.
The Medicaid intake person wants to see all of your parents' financial records for the last five years. This is known as the five year "look back." You shudder at the time and red-tape involved, but other than that you figure, no problem. You collect all of their records. And then you are asked why these checks were written to you from your mother. What were they for?
Somewhat stunned, you say that she was paying you back for items you bought for your folks while you were shopping. The person asks, "Do you have the receipts?" Of course not! Who would have thought of that?
Even the Little Things Add Up
Most caregivers don't realize, for quite some time, that they are caregivers. They are just doing what comes naturally. Few say on a given day, "Today I will become a caregiver. Today I am basically setting up a small business. I will keep records of everything I spend on my parents. We'll formalize an agreement."
That's not likely your experience, is it? It certainly wasn't mine. First my neighbor needed help, then, one by one, six elderly family members needed help. I don't recall any one day when I thought to myself, "I have a new job. I'm a caregiver."
I think my experience has been fairly typical. I receive questions from people who want to know if they should start charging their parents "rent," as their parents have lived with them for several years, and money is tight. These people aren't even aware that they may be eligible for a tax credit, depending on the income of the parents and their own income, plus the amount of care they give and money they spend on the elders. They just keep paying. Their parents supported them and they are now supporting their parents. But their parents likely have some resources. When you were a child you didn't.
There are those who say you just do it out of love, no matter what the financial cost. Most of us would like to do that. But your parents have to live somewhere. They'd have to eat. They need care. Also, if you hadn't made the choice to be their caregiver, you'd likely be making more money and contributing to your own retirement through Social Security and maybe even a 401K. But you aren't. You made a choice from the heart and you are sticking with it.
That's wonderful! But please talk with an elder attorney and/or a CPA about the financial aspects of caring for your parents. If they are paying you for items you purchase for them, keep receipts. If you are spending money out-of-pocket for their needs, keep receipts. If they are paying you a wage based on local caregiving agency charges, have a legal agreement drawn up. If they are living with you, again have a legal agreement drawn up that shows where your money, and your parent's money, goes.
It's easy to brush off caregiving costs. Caregiving is enough stress all by itself. But as time goes on, siblings can question your motives. Or your parents may hit the financial wall that qualifies them for Medicaid. Or one of your parents could become paranoid from Alzheimer's and accuse you of stealing. That old bond of trust and loosely coping with expenses no longer works. Then you have to back up and try to piece together the past without the records that could have made it fairly easy.
Do yourself a favor and be just a bit practical about the expenses of caregiving. Early on, a shoe box for receipts may be enough. But eventually, you may need a legal document drawn up. Doing so could save you enormous trouble down the road. Don't let your loving heart get you into a financial mess.