As an Elder Law Attorney, “Tell me about your mother (or father)” is a question I ask someone every day. When they reply, “Well, we have had sitters come in to be with her (or him) for the last few years” I cringe every time. Because I know that in many cases, the family has been paying the sitter or caregiver in cash, with no written contract in place. Then, when we try to make the parent eligible for Medicaid, there is a problem, a big problem.
Let me tell you a story: A former client came to me for advice. Years earlier she had liquidated all of her father’s real estate for close to $250,000. Over the next four to five years she used every dime of that money to pay for caregivers for her father. She had seven ladies that she used to care for her father from week to week. Yet, when I asked the question, “did you have a contract with the caregivers?” her reply was “No, I paid them all in cash.” My heart sank as I told her, “I’m sorry, your father probably will never qualify for Medicaid.” She was shocked! She had done all the right things to care for her father, what went wrong???
A few years ago the Medicaid Manual was amended and it tightened the rules on how Medicaid would consider payments for caregivers. If you do not use a written contract, or if you did use one and that contract does not meet all of the requirements listed under the Manual, that money will absolutely be considered a gift and Medicaid will penalize you. The penalty results in a period of time that your loved one will not be eligible for Medicaid.
Reasons a PROPER Caregiver Contract is Essential!
If you regularly provide paid care to a family member, such as a parent or grandparent, it’s very important to have an experienced Elder Law Attorney (preferably a Certified Elder Law Attorney) prepare a proper caregiver contract (also known by many other names, such as a personal-care contract or a family-care contract) setting out the terms of your arrangement. And to avoid a situation such as the case described above, the terms of the agreement must be supported in advance by a proper specialist in geriatrics, typically a Geriatric Care Manager. And, you must be sure to adhere to the terms set forth in the agreement.
The following are excellent reasons to have a proper caregiver agreement:
- It is important for Medicaid eligibility: The money a parent pays to a caregiver, absent an agreement in writing, will simply be deemed a gift by Medicaid, causing a period of ineligibility during which the parent will not qualify for the Medicaid benefit. How? At the time of a parent’s Medicaid application, Medicaid will total all the payments made to a caregiver in the past 60 months and divide that total by the state’s “penalty divisor.” As an example of how this works, let’s say a parent pays a family caregiver $60,000 over the course of three years and then applies for Medicaid. Without a proper caregiver contract in place, Medicaid would deem those payments as gifts, causing a penalty period of over 10 months!
- It sets boundaries: A detailed caregiver agreement makes clear the extent of the services being provided by a caregiver and the amount of money the caregiver is getting paid. A caregiver contract sets the understanding about the requirements and limits of the relationship.
- It helps avoid misunderstandings with other family members about who may be providing care and how much money is changing hands. If the agreement doesn’t solve a particular disagreement with family members, you may be able to add something to the document, or change its terms, to address the problem.
- It offers security and peace of mind: A caregiver contract can offer caregivers security that they will not suffer undue financial consequences. At the same time, the agreement can also offer the care recipient peace of mind that she or he has a caring advocate to manage care needs.
Paying a Family Caregiver
Yes, you can pay a family member to provide care. Even though most family caregivers want to help, and feel a sense of duty to care for a loved one without pay, the fact is that it is a job – and a very difficult job with heavy time commitments and heavy physical and emotional responsibilities. Family caregivers deserve to be paid, but the payment arrangements must be done through a properly-drafted caregiver agreement that only an experienced Elder Law Attorney can prepare.
At the Estate & Elder Law Center of Southside Virginia, we prepare caregiver contracts frequently as part of our practice and often, that contract is supported by an independent evaluation that we obtain from a Doctor, Nurse Practitioner or other professional Geriatric Care Manager.
Caregivers . . . Care for Yourself and Your Loved Ones
Are you a family caregiver? You may not be aware that the month of November is recognized as National Caregivers Month! At the Estate & Elder Law Center, we recognize that caring for a loved one strains even the most resilient people. If you’re a caregiver, take steps to preserve your own health and well-being. Part of taking care of yourself is planning for your future and for your loved ones. If you have not done your own Incapacity Planning or Estate Planning, or if you are caring for a loved one without a caregiver contract in place, or if your loved one is beginning to need more care than you can handle, please contact an experienced elder law attorney immediately to make an appointment. Don’t go it alone – Help is available!