Our office writes the weekly Family Wealth Report and the monthly newsletter Elder Law Today as an effort to provide useful information for the elderly and the disabled, their families and friends, as well as their advocates. We occasionally get questions about how to pay family members for care without causing problems with MassHealth. One proper way to handle this is through a "Caregiver Contract". We thought that this was a great topic to write about!
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 a care contract wherein the care caregiver accepts payments for the care they are providing their loved ones and also formally assumes responsibility for that care. For example, if the loved one you are caring for reaches a point where nursing home placement is the only option, all 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 provided by you while they remained in the community is just as valuable to them and worthy of payment as the care that they will receive in the nursing home. With a care contract in place, they can pay their caregiver going forward and every penny spent for benefits. Having a a care contract in place also ensures Medicaid will not impose penalties on the money received by the caregiver. Sometimes and elderly person will randomly give sums of money to their caregiver as payment for the care that they provide. Without a contract in place, Medicaid will assume the money they transferred is 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 who has provided several years of care receives the same inheritance as the other heirs, many of whom have not been involved in caring for the loved one. One 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. The bottom of line: if you are caring for a loved one or receiving care from a loved one, a care contract is a good idea for both parties involved, for multiple reasons. Before entering into such a contract, be sure to contact someone experienced in drafting such contracts and knowledgeable with respect to their effect on Medicaid qualification. Also, if you are the child who has been caring for your parent over two years, there is another Medicaid planning technique that may be available which would allow your parents to transfer their home to you without incurring Medicaid penalties. This is not true in all cases, but if you and your parents meet certain criteria, the exemption known as "Caretaker Child Exemption" could be a great way to ensure your parents' home stays in the family. If you would to an appointment to discuss protecting assets through a "Caregiver Contract" or the "Caretaker Child Exemption", please call our office today at 508-994-5200! ©Surprenant & Beneski, P.C. 35 Arnold Street, New Bedford, MA 02740, 336 South Street, Hyannis MA 02601 and 45 Bristol Drive, Easton, MA 02375. This article is for illustration purposes only. This handout does not constitute legal advice. There is no attorney/client relationship created with Surprenant & Beneski, P.C. by this article. DO NOT make decisions based upon information in this handout. Every family is unique and legal advice can only be given after an individual consultation with an elder law attorney. Any decisions made without proper legal advice may cause significant legal and financial problems.