Caregiver Contracts
Our office writes the Elder Law Today each month to provide useful information for the elderly and disabled, their family members and friends, as well as their advocates. Recently, one of our readers recommended we write an article regarding Caregiving Contracts. We thought that was a great idea, as so many of our clients care for their aging or ailing parents, friends, or relatives.
Millions of Americans are currently caring for an elderly family member or friend at home, without receiving regular compensation. Depending on the circumstances, however, it may actually be beneficial for both parties to enter into a care contract wherein the caregiver accepts payment for the care they are providing their loved one and also formally assumes responsibility for that care.
For example, if the loved one you are caring for reaches a point where nursing home placement is the only option, all of their money will be considered available to pay for their care at the nursing home and they will not be eligible for Medicaid assistance until all of their assets have been depleted. Certainly the care they were provided by you, while they remained in the community, is just as valuable to them and worthy of payment as that they will be provided in the nursing home. With a care contract in place, they can pay their caregiver, and every penny spent will count towards their “Medicaid spend down” should they apply for benefits.
Having a care contract in place also ensures Medicaid will not impose penalties on the money received by the caregiver. Sometimes an elderly person will randomly give sums of money to their caregiver as payment for the care they provide. Without a contract in place, Medicaid will assume the money transferred is a “gift” or a “transfer of assets” and will impose penalties resulting in ineligibility for Medicaid benefits.
From a caregiver’s perspective, although they are willing to provide services for free, it is often difficult for them when, at the time of their loved one’s passing,
the caregiver who has provided several years of care receives the same inheritance as the other heirs, many of whom have not been involved in caring for the loved one. On the flip side, if a caregiver is receiving payment and there is no contract in place which defines the care they have been working hard at providing, other heirs may be upset by the additional monies the caregiver received.
The bottom line: if you are caring for a loved one or receiving care from a loved one, a care contract is a good idea for both parties involved, for multiple reasons. Before entering into such a contract, be sure to consult someone experienced in drafting such contracts and knowledgeable with respect to their effect on Medicaid qualification.
Also, if you are a child who has been caring for your parent for over two years, there is another Medicaid planning technique that may be available which would allow your parent to transfer their home to you, without incurring Medicaid transfer penalties. This is not true in all cases, but if you and your parent meet certain criteria, the exemption known as the “Caretaker Child Exemption” could be a great way to ensure your parent’s home stays in the family. For more information on the Caretaker Child Exemption, call and request a copy of our Elder Law Today entitled, “Are There Ways to Save the Home?”
Elder Law Today is written by Greenville Estate Planner, Jackson E. Fields, Jr., Attorney at Law. This newsletter is published as a service of The Fields Law Firm, P.A. This information is for general informational purposes only and does not constitute legal advice. For specific questions, you should consult a qualified elder law attorney. ©
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