When mom (or dad) gets sick, the adult children are often the ones who pick up the care-provider mantle – assisting their parent with routine household chores, perhaps cooking meals, and even more basic care taking necessities such as assisting mom with going to the bathroom, bathing and eating. At some point it becomes clear that mom is getting worse and professional help is necessary. Eventually moving mom into a nursing home may be the best (or only) option. If they have not yet consulted with an elder law attorney, the cost of the nursing home hits the family like a ton of bricks:
In Florida, the average cost of a nursing home, as of 2019, is around $9,171.00 per month! The family realizes that Medicare does not pay a dime towards nursing home care after 100 days, and someone tells them that they ought to look into applying for Medicaid. Anyone who does basic Medicaid research will quickly learn that Medicaid penalizes applicants for gifting money to someone though their five year look-back.
But the mother and child may discover, after speaking with an experienced elder care lawyer, that the child can get paid for helping to take care of their mother, which, if structured properly, is one of a number of Medicaid planning strategies utilized by elder law attorneys to properly get some assets out of mom’s name.
Initially, this is exciting because, “I’ve been taking care of mom for a few years now…I should just get paid for all that care giving and caretaker work!”
Unfortunately, Medicaid just doesn’t allow it. The reason why the caretaker of a Medicaid applicant can’t just get paid, for care-giving services already provided to their mother or father, is that Medicaid only allows these arrangements if they are made prospectively (not retroactively). If made retroactively, then Medicaid deems the transfer of money a gift and imposes a penalty on the Medicaid applicant.
But there is no law that requires a child to provide care-taking services for free (although we often do out of love).
Personal Services Contract | Caregiver Agreement
If drafted properly (and there are a number of restrictions), a personal services contract or can be an incredibly effective tool to both help the parent qualify for Medicaid, while remaining in-line with their estate plan (i.e. get money to people who will inherit it anyway). A personal caregiver agreement can involve multiple people (within reason) as well.
When mom, dad and caretaker child meet with their elder care attorney to discuss Medicaid planning, the elder law attorney can draw up a personal services contract in a way that Medicaid will accept (reasonable hourly rate per social security life expectancy tables). A non-lawyer should never attempt to draft a personal-services contract on their own as mistakes can cost the parent and family valuable benefits. Furthermore, there are income-tax issues with caregiver contracts.
Personal services contracts are just one of many medicaid planning strategies that can be used to help qualify mom or dad for Medicaid, while protecting their hard-earned assets. Meet with a local elder law attorney today to discuss your family's medicaid planning options.
Getting Paid as a Family Caregiver Through Medicaid
Caring for an ailing family member is difficult work, but it doesn’t necessarily have to be unpaid work. There are programs available that allow Medicaid recipients to hire family members as caregivers - this is an alternative to family caregiver agreements / personal services contracts.
All 50 states have programs that provide pay to family caregivers. The programs vary by state, but are generally available to Medicaid recipients, although there are also some non-Medicaid-related programs.
Medicaid's program began as "cash and counseling," but is now often called "self-directed," "consumer-directed," or "participant-directed" care. The first step is to apply for Medicaid through a home and community based Medicaid program. Medicaid is available only to low-income seniors, and each state has different eligibility requirements. Florida Medicaid application approval can take months, and there also may be a waiting list to receive benefits under the program.
The state Medicaid agency usually conducts an assessment to determine the recipient's care needs—e.g., how much help the Medicaid recipient needs with activities of daily living such as bathing, dressing, eating, and moving. Once the assessment is complete, the state draws up a budget, and the recipient can use the allotted funds to pay for goods or services related to care, including paying a caregiver.
Recipients can choose to pay a family member as a caregiver, but states vary on which family members are allowed. For example, most states prevent caregivers from hiring a spouse, and some states do not allow recipients to hire a caregiver who lives with them. Most programs allow ex-spouses, in-laws, children, and grandchildren to serve as paid caregivers, but states typically require that family caregivers be paid less than the market rate in order to prevent fraud.
In addition to Medicaid programs, some states have non-Medicaid programs that also allow for self-directed care. These programs may have different eligibility requirements than Medicaid and are different in each state. Family caregivers can also be paid using a "caregiver contract," increasingly used as part of Medicaid planning.
In some states, veterans who need long-term care also have the option to pay family caregivers. In 37 states, veterans who receive the standard medical benefits package from the Veterans Administration and require nursing home-level care may apply for Veteran-Directed Care. The program provides veterans with a flexible budget for at-home services that can be managed by the veteran or the family caregiver. In addition, if a veteran or surviving spouse of a veteran qualifies for Aid & Attendance benefits, they can receive a supplement to their pension to help pay for a caregiver, who can be a family member.
For more information about these programs and other ways to be paid as a family caregiver, click here or call to set up a consultation.
Adult Child Caregiver Exception
Details on Medicaid's live-in child caregiver exception is detailed at the link. This benefit allows the transfer of a home to a caregiving child if that child provides care giving services to their elder parent for two years or more (and that care giving delays the entrance to a nursing home for at least that long). This is a nice way for my Medicaid-planning clients to leave a legacy for their child without triggering the five-year look back gift penalty rule.
Elder Law Resources