Eldercare for the baby-boom generation: are caregiver agreements valid?

Author:Knox, Sheena J.

"'We've all got the sense that this shouldn't be reduced to a monetary equation--you should do it because you love your parents....' But caregiving can be grueling, and reducing or forgoing employment can undermine an adult child's ability to save for her own retirement. 'So I don't see anything wrong with money going to the one who's actually doing the work....'" (1)

  1. INTRODUCTION

    Behind the current cacophony of concerns about the unemployment rate, slow economic recovery, and U.S. budget deficit, is the ever-present murmur of the impending economic impact baby boomers will have as they retire and rely on government benefits. (2) In 2010 Social Security went "cash negative," states threatened to drop out of the Medicaid program, and more individuals dipped into their 401k plans for current needs. (3) The "silver tsunami" looms closer as the first members of the baby-boom generation turned sixty-five in 2011, and concerns over how to manage long-term care for elders increase at an individual, state, and federal level. (4) State and federal governments' concerns come from the heavy burden long-term care for boomers will put on government-funded health services at a time when governments face pressure to cut these services to decrease deficits. (5) Individuals' worries stem from the need to provide long-term care for themselves or for aging family members. (6)

    Individuals who care, or will care, for an aging relative must consider how long-term care duties can decrease both their earning potential in the workplace and their savings as they pay for an elderly relative's necessities. (7) Caregivers often cannot afford to cut down their time or quit their job outside the home. (8) In order to continue caring for an elderly relative, an increasing number of caregivers are asking elder-law attorneys to draw up agreements in which the caregiver helps the elder for a certain number of hours each week in exchange for an hourly wage. (9) These caregiving agreements benefit both parties by relieving financial strain on caregivers and by keeping elderly relatives out of nursing homes. (10)

    While caregiver agreements may reassure individual caregivers, these same agreements are a concern for states. (11) State Medicaid agencies claim these agreements are often a front for elders to gift assets to their children, impoverish themselves, and qualify for the state to pay for long-term care in a nursing home. (12) The high price of nursing home care would quickly deplete most seniors' accumulated wealth; however, if elders can transfer their assets to their children via a "caregiver contract," elders may qualify to have Medicaid pay for nursing home care, while ensuring that their posterity will receive an inheritance. (13) States want to preserve scarce resources for those who truly cannot afford care. (14)

    This Note will explore the benefits and burdens of courts acknowledging and upholding caregiver agreements, ultimately arguing for more recognition of caregiving agreements to encourage greater numbers of caregivers for the burgeoning elder population. (15) First, this Note will examine the parties to caregiver agreements and what influence their identities may have on a court's evaluation of the agreement. (16) Parties to a caregiver agreement are typically family members, so the initial discussion of the parties' identities will lead to a discussion of the cultural and legal presumptions against family-member contracts. (17) Then, turning more specifically to caregiver agreements, this Note will outline the considerations a Medicaid agency uses when deciding if an elder qualifies for benefits. (18) State Medicaid agencies decide long-term care benefits; therefore, this Note will use Massachusetts as a case study to review caregiver agreements evaluated by the office of Medicaid Board of Hearings and state courts. (19) In light of the decisions in Massachusetts, this Note will propose clarifications to the Massachusetts Medicaid regulations to give Massachusetts and other states direction about how to allow caregivers who truly are rendering services to contract for their services, while avoiding giving elders Medicaid services if their "contract" was merely a gift. (20) In addition, this Note will analyze current presumptions about family members and contracts. (21) Finally, this Note will argue that acknowledging caregiver agreements will benefit caregivers, the elderly, and the state. (22)

  2. BACKGROUND

    1. The Parties to the Agreement

      Identifying the parties to a caregiver agreement illustrates what a caregiver agreement is and expands analysis beyond the four corners of a page. (23) Despite being ignored in some courts' written analyses, identity can influence courts' assessment of contracts. (24) one obvious facet of the parties' identities in a caregiver agreement is their relationship as family members, which is the focus of section B of this Note. (25) Another salient aspect of the parties' identities is gender because both the elderly and their caregivers are predominantly women. (26) An additional pertinent factor of identity is class because of the assumption that caregiver agreements are tools of the wealthy. (27)

      1. Gender

        Women are principally the caregivers of the elderly. (28) Regardless of employment status, women bear more responsibility for eldercare. (29) Additionally, despite eldercare not being "inextricably linked with the biological event of pregnancy," as is childcare, women still take on the majority of eldercare. (30) These care responsibilities undoubtedly impact women's earning potential. (31)

        The effect of care responsibilities can be seen from mere figures. (32) Adults who care for aging parents typically either reduce the number of hours they work or quit their other employment outside the home, thereby decreasing or negating their salary. (33) A less transparent influence on the earning power of caregivers for the elderly is family responsibilities discrimination (FRD). (34) FRD is discrimination against employees with family caregiving responsibilities. (35) While it affects both men and women, the majority of claimants are women. (36)

        Women's domestic responsibilities continue to impact hiring, promotion, and other employment decisions because "the faultline between work and family [is] precisely where sex-based overgeneralization has been and remains strongest." (37) Decreased hours and discriminatory practices resulting from caregiving responsibilities further exacerbate the already stubborn trend of women continuing to earn less than their male counterparts across the entire spectrum of careers. (38) As a result, women who work outside the home while additionally shouldering caregiving work are "underpaid for one job and unpaid for their second." (39)

        Women are caregivers, women earn less, and consequently, fewer women have pensions--public or private--and those women who do, have significantly smaller pensions than men. (40) Given women's longer life expectancy, their lack of pension funds is problematic. (41) By providing care to the elderly, women sacrifice opportunities to save and prepare for their own retirement, contributing to "the feminization of poverty among the elderly." (42)

        The ratio of males to females drops steadily as age increases, creating an "overwhelming preponderance" of elderly women to elderly men. (43) Thus, in addition to caregivers for the elderly typically being women, the elderly themselves are also generally women. (44) The recipient of eldercare is most often the caregiver's mother or mother-in-law, with caregiving services provided to fathers or fathers-in-law much less frequently. (45)

        In addition to the financial strain on women as caregivers, caregiving can cause psychological and physical stress to caregivers. (46) Family caregivers lack education and training for the demanding and technically complex tasks they are required to perform for the elderly. (47) If, however, caregivers receive training and information, the strain placed on them can be reduced. (48) Furthermore, governments potentially could decrease their health care costs if family caregivers are trained and capable of keeping elders out of hospitals and nursing homes for longer periods of time. (49)

      2. Class

        In addition to gender, the identity characteristic of class is particularly relevant information when debating the validity of caregiver agreements. (50) Rather than being used as a tool to help caregivers in financial need, Medicaid agencies and courts often view caregiver agreements as a way to help wealthy elders preserve their assets for their children as opposed to spending assets on the high cost of nursing home care. (51) The idea that some wealthy elders are using caregiver agreements as an estate-planning device warrants grave concern because of the uncontrollable growth of Medicaid and corresponding unbearable costs to the states. (52) Medicaid is a joint federal and state program that provides medical services, including nursing home care, to eligible individuals and families. (53) Medicaid costs states more money than any other program besides education. (54) And at the federal level, Medicaid has been targeted as one program necessitating cuts if a federal deficit reduction is ever to occur. (55)

        Yet not all users of caregiver agreements are wealthy citizens attempting to take advantage of Medicaid benefits. (56) "[E]veryday Americans" are using caregiver agreements at an increasing rate. (57) Families that need to find ways to care for aging parents other than by expensive, privatized care can utilize caregiver agreements to pay one family member to act as caregiver. (58)

        Families of all socioeconomic statuses need family caregivers. (59) If adult children cannot afford to give up full-time work to become caregivers, elders may be forced to turn to private-care options. (60) Elders who are forced to use more expensive care alternatives may exhaust their...

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