Paying Relatives for Caregiver Services? This Case Shows Why a Contract Could be in Order.

Family Caregiver Agreement

Family Caregiver Contracts

A growing number of people are entering into caregiver contracts with their family members.  These contracts, also called personal service or personal care agreements, have many benefits, including rewarding the family member for indispensable help.  Unfortunately when family caregivers keep their services informal, or based on an informal verbal agreements, this could have a negative impact on Medicaid eligibility. A recent Louisiana case shows the harmful impact on Medicaid eligibility that could have been avoided with a family caregiver contract.

Louisiana Man Pays Family $49,195 for Caregiving Services Over Three Years

Widley David entered a Louisiana nursing home in 2008.  Between 2008 and 2010, Mr. David wrote six checks totaling $49,195 to his nephew and his nephew’s wife, who are his closest living relatives.  According to Mr. David, the checks were intended to repay the couple for daily care that they provided him in the nursing home.  They visited Mr. David daily, drove him to appointments, and paid various bills.  The nephew even quit his job so that he could devote himself to Mr. David’s care.

Medicaid Officials Determine Payment to Family for Caregiving Services Were Asset Transfers Causing Delay in Qualifying for Medicaid

But when Mr. David applied for Medicaid in December 2010, Louisiana Medicaid officials contended that the checks were intended not to repay the relatives but to reduce Mr. David’s assets so he could qualify for Medicaid.  The officials determined that due to the asset transfers, Mr. David would have to wait nearly 15 months before qualifying for Medicaid.

Medicaid Officials State a Written Contract or Personal Care Agreement Would Have Validated Transfer of Assets as Payment

The Medicaid officials noted that the payments would have been valid if they had been made as part of a written personal care agreement.  Unfortunately, Mr. David and his relatives had never executed such an agreement.  Nevertheless, a trial court ruled in favor of Mr. David, persuaded that the payments were reimbursement for care and not to qualify Mr. David for Medicaid.  Louisiana Medicaid appealed this ruling.

Personal Care Contract Makes Family Caregiver Payments Valid

On December 23, 2014, the Louisiana First Circuit Court of Appeal said it disagreed with the trial court and overturned the decision.  The appeals court found that the lack of a personal care agreement made the transfers to the relatives improper.  The court stated that a “payback arrangement or personal care agreement was necessary to validate this alleged arrangement; however, Mr. David did not offer any type of tangible or documentary evidence of an agreement, contract, or Personal Care Agreement to substantiate and validate his argument.”

If you intend to repay family members or friends for their caregiving work, you need to draw up a formal agreement, especially if you think you will ever apply for Medicaid long-term care benefits.  It is important to get your elder law attorney's help in drafting this type of contract.

Elder Law Attorney To Create Family Caregiver Agreement

At Joseph L. Motta, elder law and estate planning firm in Avon Lake, OH, we know how to help you avoid delays in qualifying for Medicaid with our expert long-term care and estate planning and we truly enjoy putting to use our knowledge and expertise to provide you with the best advice. Call 440-930-2826 to schedule a free consultation.

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