What is a caregiver contract?

A caregiver contract is an agreement that ensures that caregivers are protected and the family members who are involved in elder care fully understand all expectations and responsibilities of the caregiver. A caregiver contract may also be referred to as a personal care agreement. This type of contract has become more common as the role of caregiver has evolved both socially and legally over the past few years.


Caregiver contracts are meant to avoid any ambiguities that could lead to imbalances and acrimony among those involved in the care of an elderly individual or someone in need of ongoing care.

Full-time caregivers need to have a caregiver agreement in their possession to protect themselves from becoming embroiled in conflicts, but it can also help ensure that the elderly individual is compliant with Medicaid, just in case long-term care must be provided through a facility at any point.


By putting all caregiver expectations and responsibilities in writing, everyone in the family can stay on good terms. Family conflicts can be avoided by carefully outlining all the important details of caregiving in this document. And while the elderly individual is assured excellent care according to the caregiver agreement, the caregiver is also protected from being exploited.

By precisely defining the appropriate standard of care for a loved one, and the responsibilities and limitations of caregiving by the caregiver, ambiguities can be avoided for the benefit of everyone involved.


How to Create a Caregiver Contract

The creation of a caregiver contract begins with a discussion that involves all family members. This discussion needs to take place at a time when all family members can be involved and the topic should include all details related to elder care.

If some family members aren’t available to attend an in-person discussion, it’s important to make sure everyone’s opinions are properly represented to avoid excluding people who may be crucial to the elderly individual’s well-being. Family members who can’t attend a discussion in person may be able to attend via telephone or video conferencing.


Once the family is assembled, it’s important to discuss the following important points:


●       The schedule of caregiving needs.

●       When decisions regarding caregiving must be made.

●       Costs of the various types of senior care including assisted living, long-term care, and personal caregiving in the home.

●       The loved one’s personal care needs (be specific).

●       Who is available to assist with caregiving and what types of care can they provide.

●       Where the loved one will live.

●       Medicaid compliance and non-compliance issues.


This initial discussion could take a substantial amount of time and family members may disagree and have strong feelings about certain aspects of the loved one’s care. Discussing caregiving for an elderly loved one can bring difficult feelings to the surface about a parent in declining health. Be respectful of everyone’s feelings and be sure to give each family member plenty of time to talk.


If you don’t feel like you can be diplomatic during a caregiver contract discussion, consider hiring a mediator to manage conflicts among family members. Indeed, mediators are often necessary because when one family member is acting as a formal caretaker for a loved one, this highlights underlying family dynamics that point to serious familial issues like favoritism, competitiveness, or jealousy. A mediator can help keep a conversation about caregiving fair and balanced so that it can move forward productively.


In addition to a mediator, you may also want to consider inviting an accountant to the caregiver contract discussion. An accountant can distill information about general finances and taxes that will be relevant to making final decisions. Set up an appointment to discuss the situation with an accountant in the office. Family members who act as personal caregivers need to know whether the compensation they receive will be taxable or not. An accountant can help determine whether their specific circumstances would warrant filing the paperwork and paying employer taxes or not.


What issues may arise in families to warrant a caregiver contract?

When family members gather to hash through the creation of a caregiver contract, a number of issues may arise. These are the issues that the caregiver contract should resolve and therefore mitigate in order to benefit everyone involved. Family members may disagree about who will contribute money and how much money to contribute to elder care. Financial disagreements are common, but they must be discussed and a resolution must be found. In some cases, caregiver payments may be divided among the various family members or taken from the senior citizen’s estate.


Family members must consider Medicaid rules and regulations during the creation of a caregiver contract. Caregiver payments must be compliant with these rules which may change the overall care plan. An emergency plan must be in place such that there are back-up caregivers in case the primary caregiver is not available or able to perform their normal duties. Having a plan in place like this and putting it in writing can avoid future disputes.


Discussing the loved one’s care plan can bring up hard feelings among family members because often, the caregiving plan highlights issues within the family that already existed before the loved one required care. Some family members may feel overburdened or like they carry a heavier burden than the others. Other family members may resent the cost of care due to a long-standing conflict with the aging loved one. Each family member will have their own view of how the loved one should be cared for and this can lead to disagreements within the family.

The Specifics of the Contract

There are some important questions that family members often overlook when creating a caregiver contract. These important questions can cause problems later on down the road. Working with professionals like an accountant or a lawyer to address these finer details can be beneficial for this reason.


One thing to consider is the fact that family members who give up jobs or careers to care for an aging loved one, often collect payment privately. This income isn’t reported to the IRS. Family members who are paying the caregiver also do not file with the IRS showing that these payments were made. This is not the recommended way of doing things, even though it isn’t technically illegal because it can lead to other issues later on with Medicaid.


Medicaid may classify the income that was paid to the caregiver as a gift, which could become a problem if the family member ever needed access to a long-term care facility. In this situation, the elder loved one may find it difficult to qualify for coverage because Medicaid or Social Security income is connected to caregiving contracts. Talk to an attorney prior to the creation of a caregiving contract to avoid causing problems with Medicaid or Social Security later on in the future.

What elements should be included in the caregiver contract?


A caregiver contract should always include a general overview of information that pertains to the location of caregiving, dates and times, expenses, payment terms, compensation and benefits. Below is a discussion of the specific details that need to be covered regarding each of these general topics:




In some cases, caregivers give up a job to stay with a loved one during their time of need. When this is the case, the caregiver may be leaving behind a secure income and employment benefits. It’s important to discuss health insurance options including costs and benefits as well as paid vacation time and sick days as part of the caregiver contract meeting.




Full-time caregivers must be paid at a reasonable rate for the hours that they’ll be working. Income should be roughly comparable to what professional caregivers get paid with special attention to Medicaid compliance.


In addition to the hourly pay, other aspects of payment must also be included in the contract. What is the pay schedule for the caregiver? Do they get paid weekly on a certain day of the week? Do they receive payment via bank transfer, as a check, or via another method? Again, remember to stay in compliance with Medicaid when you come up with the payment terms for a caregiver.



The responsibilities outlined in a caregiver contract must be dated so that it’s clear when they begin and when they end. An end date may need to be set as a time when family members will reconvene to consider the terms of the agreement anew.




A caregiver contract is drawn up to define the specifics of a job. As such, it needs to include information about work hours. It’s vital that the number of hours as well as the days of the week when care provision is given are realistic for the caregiver. When the caregiver is not available, there needs to be information in the contract about who is responsible for caregiving when the caregiver-in-question is not available.





When someone is given the responsibility to provide care for another person, the details of caregiving must be spelled out clearly. Caregiving is a general term. The specifics of the caregiver’s responsibilities should be considered and outlined specifically in terms of Activities of Daily Living (ADL’s).

The ADL’s are commonly used in the senior living industry to determine a patient’s level of need. Responsibilities may include cooking, feeding, toileting, bathing, dressing, or any other activity of daily living that the loved one cannot perform himself or herself. Both the caregiver and the other family members involved need to fully understand and agree on the responsibilities of the caregiver and outline them specifically in the contract.



In addition to the hands-on responsibility of providing care, often caregivers incur expenses when they run errands on behalf of the loved one. Errands may include grocery shopping, taking the loved one to doctor’s appointments, or picking up prescriptions. The caregiver contract should include provisions for how to handle these additional expenses.


Does a caregiver agreement need to be notarized?

The caregiver agreement should be notarized at the time of signing. It should have a contract date and it should be signed not only by the recipient of care (if this is not possible, a power of attorney could sign on their behalf), but also by the caregiver who will be performing the services.

The Legalities of Making a Caregiver Contract

In addition to the details of where, when, who, and what, the caregiver contract must also be created according to certain laws that make it enforceable. Below are some of the most important legal issues to consider when making a caregiving contract:


●       The caregiver contract must be written down before caregiving services are rendered.

●       The caregiver agreement should provide a detailed list of the services that will be included as well as services that will be excluded. For example, if non-medical care, light housekeeping, meal preparation, transportation to doctor’s appointments, and basic assistance with the loved one’s activities of daily living are responsibilities that are included in the contract, the caregiver should be compensated fairly for these duties. On the other hand, when the caregiver provides care that goes beyond the responsibilities outlined in the caregiver contract, the caregiver will need to be fairly compensated for these activities.

●       The rates listed for services provided must be comparable to the rates that are charged by commercial entities in the same general location that provide personal care.

●       The contract must be signed and dated by both the recipient of care (or a power of attorney) as well as the caregiver.

●       Signatures must be notarized at the time of signing.


Alternatives to Caregiver Agreements

If your situation does not seem like it will work well under a caregiver agreement, there are alternatives. Certain financial scenarios may make it difficult or impossible to make a caregiver contract feasible. In other cases, family dynamics may make it impossible to fully execute on a caregiver contract. Whatever the reason, we’ve listed some alternatives below for consideration if a caregiver contract simply won’t work in your situation:


A Private Care Agreement


In some situations, a caregiver agreement may not work due to financial reasons. Instead, a private care agreement may make more sense for everyone involved. A private care agreement involves a transfer of property (such as the family home) in exchange for a promise of support and care. The agreement may involve a promise to care for the loved one for the rest of their life in exchange for the inheritance of property.


A private care agreement can be drawn up in a number of different ways to ensure that the exchange is fair for everyone involved. Sometimes the elderly individual will put the property in both the owner’s name and in the name of the survivor who is expected to take control of the property after the owner passes on. This is known as “joint tenancy” and this arrangement typically assumes that the senior and the caregiver will be living together in the same family home.

Community Housing Options

Many families struggle to come up with a live-in caregiver scenario that works within the context of their family dynamic. In situations where family members are constantly in conflict over how a loved one should be cared for, community housing options may be the best choice. There are several different types of community housing that address the needs of aging individuals who are not quite ready for long-term care. These include:


●       Assisted Living


This type of housing allows elderly individuals to live independently in an apartment complex where there is assistance available. Meal preparation, personal care, and housekeeping are often provided and a professional staff is there 24 hours a day to ensure that residents are safe and properly cared for.


●       Congregate Housing


Congregate housing also allows residents to live somewhat independently while integrating supportive services into the experience. Each resident has a room and private bath with shared living spaces such as a living room and kitchen where residents can socialize.


●       Elder Housing


This is an affordable adult housing complex option that may be able to offer public subsidies to certain residents who are eligible to help them cover the cost of rent. Some supportive services may be available to individuals who are in need of assistance with Activities of Daily Living.


●       Supportive Housing


Supportive housing environments provide services that are geared toward both individuals and toward the community as a whole.




The Consumer Directed Personal Assistance Program (CDPAP) is a NY Medicaid program that allows family members to care for their elderly parents without the need to create a caregiver contract. Through this program, an elderly individual can hire their own caregiver and still receive Medicaid benefits to pay for this service.


Applying for CDPAP as a Medicaid Recipient in NY

The Consumer Directed Personal Assistance Program (CDPAP) is a Medicaid program that was created to provide services to the elderly, those who are chronically ill or physically disabled, and individuals who need assistance with Activities of Daily Living (ADL’s). CDPAP was also developed to provide skilled nursing care. Service provision may involve a home health aide, personal care aides, or a nurse.


CDPAP allows the elderly individual or family members to choose their caregivers. Through this program, the elderly individual (or their representative) assumes responsibility for all administrative aspects of caregiving including hiring, training, and supervising caregivers. The flexibility inherent in this program makes it appealing for a lot of families. In order to sign up for CDPAP, the doctor of the elder receiving care must complete a Physician’s Order for Services and submit it to the local services district. Then, a social and nursing assessment must be completed.