Use of Personal Care Contracts for the Alzheimer's Patient

Personal Care Contracts

Millions of Americans are currently caring for an elderly family member or friend, without receiving 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.

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.

It is important to note that without a proper contract in place, Medicaid will assume the money paid is a “gift” or a “transfer of assets” and will impose penalties resulting in ineligibility for Medicaid benefits.

While most of you may already be aware that Medicaid allows care contract payments for caring for loved ones living at home, you may not be aware that payments made via personal care contracts for providing care services for nursing home residents are also an allowable spend down.

Let's give an example: Imagine that daughter agrees to perform a number of services for her mother, including but not limited to preparing meals, cleaning, laundry, assistance with grooming, bathing, personal shopping; monitoring her mother’s physical and mental conditional and nutritional needs in cooperation with health care providers; arranging for transporting; visiting weekly and encouraging social interaction; interacting with and/or assisting in interacting with health care professionals, etc. for her mother’s lifetime, in exchange for a lump sum of $30,000 via a care contract.

Now, whether this will be allowed will be dependent upon the state determining that the Contract in place had fair and valuable consideration. While a personal care contract may not be appropriate in everyone’s situation, if you are caring for your loved one at home or in a nursing home, it is something that you may want to discuss with a knowledgeable Elder Law Attorney who can advise on possible tax consequences and/or Medicaid and estate planning issues.

For more information visit us online at www.williedasherlaw.com or visit the Alzheimer's Legal Resource Center at: www.alrconline.com