Many families face the challenge of providing care to an ill, disabled, or aging family member. Creating a formal Care Contract among family members is a way to compensate a family member who provides care. It also allows the family member in need of care to transfer assets to pay for the care in a manner that does not affect his/her Medicaid eligibility.
What is a Care Contract? A Care Contract is a written agreement between a family member who agrees to provide caregiver services and an ill, disabled, or aging family member who is in need of care or assistance.
What the Care Contract says. The Care Contract lists the tasks the caregiver is expected to provide, such as helping the relative with bathing, dressing, meal preparation, managing finances, running errands, etc. and sets the compensation he/she will receive.
Shouldn’t family members help each other for free? Ideally, yes. The reality, however, is that providing care takes time, often impacts the caregiver’s personal life, and sometimes impacts the caregiver’s employment. Moreover, a goal of the family member in need of care often is to reduce his/her assets to Medicaid eligibility levels. This makes a Care Contract a win/win.
Does paying a caregiver affect Medicaid eligibility? With a proper written Care Contract in place, paying a caregiver a reasonable amount of compensation is a legitimate way to give money to a family member who provides the care.
The moral of the story? In appropriate cases, creating a written Caregiver Contract between family members is a helpful Medicaid planning strategy. It gives the care recipient the benefit of a family caregiver and a method to transfer assets without adversely affecting his/her Medicaid eligibility.
For advice specific to you or your family, please contact the office. We would be glad to meet with you for a no hassle, no charge initial consultation, no matter how long it lasts.