Personal Care Contract Lawyer
Protect Your Medicaid Eligibility
Did you know that if you pay a relative or friend to provide care for you that your payments could be treated as gifts and count against you for Medicaid eligibility?
Your efforts to spend down your assets to qualify for Medicaid long-term care benefits could be working against you.
But with the right personal care contract, you can compensate family or friends for their service without jeopardizing your Medicaid eligibility. Plus, a properly-written care contract can create certainty and reduce the potential for family friction in the future.
How We Help
At Huizenga Law, we build comprehensive plans to help seniors and their families protect their future opportunities. In many cases, this includes developing strategies to establish eligibility for Medicaid long-term care benefits to pay for the cost of care in the home or in a professional facility.
If you are working to qualify for Medicaid benefits or if you already receive benefits and would like to use those benefits to pay a friend or family member for care, we can create a personal care contract that meets Medicaid requirements. The right contract also helps everyone in the family understand what the caregiver is and is not responsible for doing, and how much they will be paid for those services. This can reduce conflict and bring attention to any gaps in services that should be addressed.
Getting What You Need from a Personal Care Contract
A personal care contract needs to be drafted with the right terms to protect your Medicaid eligibility. The goal is to establish an agreement that shows that payments to a friend or family member is a fully-compensated transfer under Iowa Medicaid eligibility rules. You don’t want the payments to trigger any transfer penalties. You are paying a member of your family or a friend to provide care services that would otherwise be provided by a professional caregiver, and the agreement needs to demonstrate that conclusively to satisfy Medicaid requirements.
Your personal care contract should specify:
- The tasks the caregiver will be providing. For instance, the agreement might describe services such as picking up prescriptions, driving to appointments, administering medication, bathing, cooking, cleaning, buying groceries, and other tasks.
- Days and hours of service. This could be described daily or weekly, but should also mention days off.
- Compensation for services. The contract should describe the rate of pay and frequency of payments. It is vitally important that the pay rate be comparable to what caregivers in your area receive for similar services. Otherwise, the payments could still be treated as gifts and counted against you for Medicaid eligibility.
Remember that when you give away property as a gift, sell property below market value, or pay more than market value for services, it is counted against you for five years.
Tax Treatment of Caregivers
Even if the person providing care under a care contract is a member of the family, in many cases the person paying for care is supposed to treat them as a household employee for income tax purposes. In that case, the payor must withhold wages and submit payments for Medicare and Social Security taxes. The payor would also need to issue a W-2 form if the caregiver is considered an employee by the IRS.
If the payor tries to treat a home caregiver as an independent contractor with a 1099 form when the IRS believes the caregiver qualifies as an employee, the payor could incur tax penalties.
Protect Yourself with the Right Personal Care Contract from Huizenga Law
Even if you don’t plan to establish Medicaid eligibility, it is always a good idea to set forth obligations in a personal care contract to protect both you and your caregiver. If the situation changes in the future and you want to seek Medicaid, the care contract protects your position. In addition, you will all understand what’s expected of your caregiver, which can prevent misunderstandings and disagreements later.
We’d be happy to talk to you about how a personal care contract could protect you and your family. Just give us a call.