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 is around $8,600.00 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 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 caregiving 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 personal caregiver agreement 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 law 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.
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.
Adult Child Caregiver Exception
Details on Medicaid's live-in child caregiver exception is detailed at the link.
Elder Law Resources