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Many of my older clients, aware of their declining physical capacities, are increasingly open to the idea of receiving in-home healthcare. It's an excellent way for seniors to maintain their independence and stay in their own homes as long as possible before needing the full array of assisted living or nursing facilities.
But in-home care is expensive. Professional caregivers can charge anywhere from $35 per hour for light tasks like housekeeping and meal preparation to $150 or more for attending medical appointments, coordinating healthcare, or managing financial matters.
One solution is to pay an adult child or other family member for providing the necessary assistance. This can be more affordable than hiring outside help. Since the family member doesn’t have the same overhead expenses as a commercial provider, a fair compensation rate is generally around 50% of what a commercial caregiver or professional advocate would charge.
This arrangement can be beneficial for both the parent and the child. Financially, it provides significant advantages for the parents, who would otherwise have to pay double the amount for the same services. It respects the child’s time and reduces the financial sacrifice involved if they need to take time off work or give up their job. It can address potential conflicts among siblings after the parents pass away, preventing any feelings of resentment around unequal treatment. Additionally, family members often possess a deeper understanding of the senior's specific needs and preferences, which can result in higher quality care.
But paying a child for in-home care is not without its challenges. One major concern is the money scripts people may have around compensating family members for help. An example is, “Children should take care of parents out of love, not for money.” Both parents and children may have deep beliefs (pro and con) about children being compensated for providing care. Other siblings might feel resentful about the arrangement. Especially if some family relationships are already strained, the situation can be emotionally complex.
Of course, if a parent is unable to compensate the child or expects them to provide in-home care for free, that also can create additional emotional and financial difficulties and strain family relationships.
There's also a risk of conflicts of interest if the child holds the senior’s power of attorney, manages their financial affairs or is the executor of their estate. This could compromise the fairness of the compensation arrangement. Additionally, if the child's care is negligent or causes harm, they may face legal liability.
If you are considering this option, it's crucial to engage in open family discussions and carefully evaluate all the factors involved.
Here are a few key points to consider:
1. Costs: Assess the amount of time and care needed, keeping in mind that the need is likely to increase over time. Determine what the senior can afford and what payment rate fairly compensates the family member for their services.
2. Emotional considerations: Explore as honestly and openly as possible the beliefs and emotions both parents and children – including those not providing care – may have around this issue.
3. Legal aspects: Consider the potential legal risks and responsibilities. One example is the issue of paying Social Security (FICA) taxes for the caregiver. It may be wise to consult an attorney and to have a written agreement that clearly outlines the terms of the arrangement.
Deciding whether to pay a family member for in-home care is highly personal and dependent on individual circumstances. By considering all these factors thoughtfully, you can make an informed choice that all of you believe can work well for your family.
Rick Kahler, MS, CFP®, CFT-I™, CeFT®, CCIM, is the founder of Kahler Financial Group, a Rapid City, SD-based fee-only Registered Investment Advisor.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
