By Daniel O. Tully
Millions of Americans are currently caring for an elderly family member or friend at home, without receiving regular 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.
For example, as the loved ones you are caring for reach a point where nursing homes 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 with it the nursing home. With a care contract in place, they can pay the caregiver and every penny will count toward their “Medicaid spend down” should they apply for benefits.
Having a care contract in place also ensures Medicaid will not impose penalties on the money received by the caretaker. Sometimes an elderly person will randomly give sums of money to their caregivers as payment for the care they provide.
Without a contract in place, Medicaid will assume the money transferred as a “gift” or a “transfer of assets” and will impose penalties resulting in ineligibility for Medicaid benefits.
From a caregiver’s perspective, although they are willing to provide services for free, it is often difficult for them when at the time of their loved one’s passing; the caregiver receives the same inheritance as the other heirs, many whom have not been involved in caring for the loved one. On the flip side, if a caregiver is receiving payment and there is no contract in place that defines the care they have been working hard at providing, other heirs may be upset by the additional monies the caregiver received.