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Taking care of your parents can be a full-time job, especially if they have a debilitating health condition. And surviving without an income is financially draining because you have to use your savings to meet expenses. Therefore, you might ask if social security can be your income source when taking care of your parent.
Social security does not pay you to take care of a parent. It only pays monthly retirement benefits to seniors over 62 years and disability income to qualified individuals. However, you can receive the benefits on your parent’s behalf but use them to meet their expenses.
This article discusses the ins and outs of social security in relation to caregiving. It also explores programs that pay caregivers directly and tips on caring for your parents without sacrificing your income. Let’s dive in.
Can I Get Social Security for Parental Caregiving?
Taking care of your parents can be a rewarding experience. You get to spend time together and provide a socially secure environment for their golden years. However, this commitment does not come without its financial hurdles. And if you’re experiencing it, you are not alone.
In a study by the American Association of Retired Persons (AARP), 78% of family caregivers spend an average of $7,200 out-of-pocket to cater for loved ones’ expenses annually. Twenty-three percent confess they have gotten into debt. At the same time, 28% can no longer save for their future.
When you get yourself in this situation, social security is the first place you think can provide financial security for caregivers. After all, it is the primary income source for the retired.
But the sad truth is that social security does not provide caregivers with support or income. However, if a balance remains after paying for expenses, your parents can use it to pay you for your caregiving services.
But, if you manage your parent’s social security income, you cannot compensate yourself. You’ll be expected to take care of the following:
- Your parent’s daily expenses, such as food and rent
- Medical expenses not covered by the insurance
- Personal needs like clothing
Any amount that remains goes to your parent’s interest-paying savings account. At the end of each year, you must provide a report to the Social Security Administration (SSA) showing how you have used the money.
That said, it’s worth noting that your elderly parent can give you some money from their savings account. To know more, you can check out my article discussing how much money an elderly parent can give a child. How Much Money Could an Elderly Parent Give a Child?
How Does Social Security Work?
Social security is a payroll tax-funded government program aiming to provide taxpayers with financial security, mostly in old age. For employees, the program follows a matching policy where the employer contributes 6.2% to the fund and withholds 6.2% of your earnings.
On the other hand, if you’re self-employed, you contribute 12.4% of your earnings. When you retire, Social Security Administration (SSA) begins to pay you depending on your age and the amount you have accumulated. Your benefits will be lower if you retire at 62 and higher if you retire at the full retirement age.
Types of Social Security Benefits Available
Though, as the caregiver, you don’t qualify for social security benefits, claiming all benefits your parent is eligible for can lighten your financial burdens. Below are the types of social security benefits you should be aware of:
Retirement Benefits
Ninety-seven percent of social security beneficiaries are retirees. This means most of the social security benefits go towards funding retirement claims. To qualify for retirement benefits, you must be 62 or wait till your full entitlement age (67).
Also, you must have worked for at least ten years to accumulate 40 credits. Remember, the retirement benefits do not meet specific needs. They are paid in cash, and the beneficiary or the caregiver has to budget.
Disability Benefits
As the name suggests, these benefits go to individuals with long-term medical incapacitation who are unable to work as a result. If the disability is short-lived, you don’t qualify for these benefits. There are two categories of disability benefits:
- Supplemental Security Income (SSI): This is for people with disability and limited resources irrespective of age. Seniors who are 65 and above and have met the social security financial eligibility also receive these benefits.
- Social Security Disability Insurance (SSDI): Unlike SSI, which is for anyone with a disability, SSDI goes to disabled individuals who have earned work credits directly or through a spouse or family member.
Note: You can qualify for both SSI and SSDI.
Survivor Benefits
Survivor benefits belong to beneficiaries of a deceased worker. The monthly amount the Social Security Administration pays depends on the deceased’s working history. Also, anyone can claim the benefits, including a spouse, child, or a named beneficiary. However, some rules apply:
- If you qualify for retirement benefits, the Social Security Administration pays the higher of the two benefits.
- You don’t receive 100% of benefits if you are under retirement age. The benefits are reduced depending on your earnings.
- If you divorce and get married again before the age of 60, you cannot claim survivor benefits from your ex-spouse.
That said, if you’re struggling to provide the necessary care to your elderly parent both financially as well as in terms of manpower, you can consider applying to make them a ward of the state. I have an in-depth article discussing how that procedure is handled. You can check it out for further clarification. How to Make an Elderly Parent a Ward of the State
Applying for Social Security Benefits on Your Parent’s Behalf
Applying for social security benefits is not a complicated process. It takes an average of 45 minutes as long as you have the necessary information ready. Some of the crucial details you need include the following:
- A copy of your parent’s tax return from the preceding year
- Your parent’s social security number
- Bank account number where SSA will deposit the money
- A record of your parent’s earnings from the past two years
Once you have the documents ready, you can use two methods to apply:
- Online application: You log in to your parent’s social security account, fill in the details needed, and upload documents by following instructions.
- Manual application: This method involves visiting the nearest social security office and completing the application physically. Alternatively, you can call the social security office during working hours to book an appointment where you’ll complete the application via a phone call.
You can start the application process four months before the eligibility date.
Programs That Pay for Parental Caregiving
Although social security does not compensate caregivers, some programs do. However, they may not be available in every state and require you to meet some conditions to qualify for the compensation. Some of the programs include:
Medicaid Program
Medicaid is popular for providing financial assistance to seniors in nursing homes. But recently, four programs have evolved to allow eligible seniors to receive care away from the primary place of residence or caregiver’s home. Moreover, they provide compensation to caregivers for their services.
Community First Choice (CFC)
Community First Choice (CFC) is a state plan option that provides personal care to seniors who qualify to be in nursing homes. Apart from offering long-term care, this program also offers a self-directed option.
As such, the recipient can choose not to go to a nursing home and instead hire their child or friend to care for them.
During enrollment, Medicaid assesses the beneficiary’s health condition to determine the number of hours the caregiver will work weekly. The caregiver receives an hourly rate of the approved hours.
Home and Community-Based Services (HCBS)
HCBS are also called Section 1115 Waivers. The program has human and health services categories funded through the state waiver under Medicaid.
Unlike CFC, which is eligibility-based, HCBS is an enrolment program with caps and a long waiting list. Beneficiaries must also be unable to carry out basic activities such as dressing, bathing, and cooking.
The program has a consumer direction option that allows the beneficiary to choose a caregiver at home or in a community. The caregiver receives compensation at the hourly rate.
Adult Foster Care
Adult Foster Care is for adults with developmental or intellectual disabilities who cannot live alone. Under this program, Medicaid allows adult children to host their parents and provide the necessary care.
In return, they receive compensation for their services. However, Medicaid does not pay for the room you offer your parent. The beneficiary also continues to receive Medicaid benefits normally.
Medicaid Caregiver Exemption
The Caregiver Exemption program prohibits children of Medicaid beneficiaries from receiving monetary compensation for their services. However, the caregiver can claim compensation through the beneficiary’s assets.
Instead of Medicaid possessing the senior’s assets through the Estate Recovery Program when they die, the child or the caregiver can claim transfer of ownership. But, the caregiver must prove that:
- The parent suffered from a condition that prevented them from staying in a nursing home.
- They have provided care for more than two years.
- They provided care at the parent’s home or estate.
Veteran Programs
Veteran programs are available for seniors with disability or health conditions preventing them from doing daily activities. Examples of veteran programs that pay caregivers include:
Veterans Directed Care
Veteran Directed Care started in 2008 and is available in over 40 states. Veterans in this program manage their long-term service and support, including hiring a caregiver at home or in a community.
The caregivers receive hourly rate payments, which the Veteran Health Administration adjusts annually.
Aid & Attendance and Housebound benefits
This program is for individuals who receive veteran pensions. They also must be disabled or unable to live independently. The program pays for caregiving services indirectly.
The Department of Veterans Affairs determines the pension amount depending on a beneficiary’s net non-pension income. Usually, the beneficiary deducts all the expenses, including care-related expenses.
As such, your parent can hire you as the caregiver and deduct your invoices from their retirement income. In return, the Veteran Affair adds to the veteran’s benefits.
Long-Term Care Insurance
Since this program covers all expenses related to senior care, your parent can use the benefits to compensate you.
However, before receiving such payment, you should read the insurance terms carefully. Some policies prohibit family members from receiving compensation for their care services.
If the policy allows you to receive payment, you’ll have to declare it as income and file taxes.
Paid Family Leave (PFL)
Instead of quitting your job, you can opt for paid family leave. To qualify, you must have worked consecutively for your current employer for at least 26 weeks (more than 20 hours per week).
However, this is a short-term solution because a paid family leave extends for at most three months. After that, the employer has no legal obligation to pay you. You’ll have to quit and care for your parent full-time or return to work.
Can You Take Care of Your Parents Without Quitting Your Job?
Juggling work and caring for your parents can be daunting—especially if your parents need round-the-clock care. But again, quitting means losing your income and your work benefits. Research by the National Library of Medicine in 2021 shows that employees who quit to care for their seniors lose an average of $303,880.
If you are still debating whether to quit, you might be wondering what’s the feasible solution. The truth is, there’s no guarantee that you’ll receive compensation from the above programs for your care services. And unless your parents are in critical condition, keeping your job provides financial security.
Other alternatives to help you maintain income flow while caring for your parents include the following:
- Working part-time: Instead of working regular weekday hours, you can explain your situation to your employer and ask to reduce your weekly working hours. This will give you time to care for your parents and keep your income, though lower, because of reduced hours.
- Work remotely: If you choose to quit, you can look for a freelancing job. It’ll allow you to work from home and manage your time to care for your parent.
- Ask for help from family or community: Sharing the burden of caring for your parents with your siblings or asking for volunteer help can help you balance work and being present when your parent needs you.
It’s important to remember that while it is your responsibility to take care of your parents, you don’t necessarily need to do it alone. Check out my article on this subject to get some clever tips to help you and your parent navigate this situation successfully. Is It Your Responsibility to Take Care of Your Parents?
Final Thoughts
Social security provides income for seniors but not their caregivers. But since social security does not channel the income towards specific expenses, your parent can budget the money to pay you for your services. Alternatively, you can research if you qualify for the programs that directly pay caregivers.
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