E.A. lived with her daughter, B.C., who was her caregiver from 2004 until 2012. They entered into a care agreement, in which E.A. was to make regular monthly payments to her daughter in exchange for room, board, and caregiving. The rate paid to B.C. was based on the cost of a licensed and bonded home health aide company. B.C. occasionally was paid more than the contract called for and did not keep records of the services provided. In 2012, E.A. ran out of money and entered a nursing home in New Jersey, and subsequently applied for Medicaid. The state ignored the care agreement and found that E.A. had transferred a total of $244,510 to B.C., imposing a 936-day penalty period.
How could this have happened? E.A. disagreed with the decision and appealed, arguing that the state should not have disregarded the care agreement and that the state did not count the value of B.C.’s services. After a hearing, the administrative law judge ruled the penalty period was appropriate.
According to the court, B.C. and E.A. did not comply with the agreement when B.C. was paid more than the contract called for, and B.C. was not entitled to the rate charged by the private home health agency because she did not provide the same full-time services as the agency. In addition, the court ruled that E.A. did not provide enough details of the types of services actually provided under the care agreement for the state to calculate the value of her services.
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 such as myself) 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 reasons to have a proper caregiver agreement:
- It is important for Medicaid eligibility: The money a parent pays to a family caregiver, absent an agreement in writing, will 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 family caregiver in the past 60 months and divide that total by the state’s “penalty divisor.” The quotient is the penalty period, which equals the number of months Medicaid will not pay for nursing-home care. In Northern Virginia the penalty divisor is $8,367, and in the rest of the state it’s $5,933. 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 7 months in Northern Virginia ($60,000 divided by $8,367) and a penalty period of over 10 months anywhere else in the state ($60,000 divided by $5,933).
- It sets boundaries: A detailed caregiver agreement makes clear the extent of the services being provided by a family 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’s 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 family 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
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.
Caregiver Contracts at the Farr Law Firm
At the Farr Law Firm, we prepare caregiver contracts frequently as part of our Level 4 Planning, and the contract is always supported by an independent evaluation that we obtain from a professional Geriatric Care Manager.
Caregivers . . . Care for Yourself and Your Loved Ones
Are you a family caregiver? At the Law Firm of Evan H. Farr, P.C., 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, or if your loved one is beginning to need more care than you can handle, please contact us as soon as possible to make an appointment for a consultation:
Fairfax Elder Law: 703-691-1888
Fredericksburg Elder Law: 540-479-1435
Rockville Elder Law: 301-519-8041
DC Elder Law: 202-587-2797
About Evan H Farr, CELA, CAP
