No Caregiver Agreement? No Good!

Are your parents getting older and are they in a greater need of assistance and care, but they do not need or want to move to a care facility at this time? Are you doing a lot of work for your mother or father? Are you: preparing their meals, doing their laundry, cleaning their home, caring for their yard, bathing them, shopping for them, spending days or nights at their home? Have you moved into their home? Have they moved into your home? These are all important questions to consider because your aging parent or loved one might need nursing home care in the future despite your best efforts.

Should nursing home care become necessary, the care costs will likely exceed $100,000 per year. There are many great options available for protecting assets from the rising cost of long term care. Many of them are outlined in articles on this site. Please review past articles to get other great ideas and insight.

One important way to protect assets is to make sure the family caregiver is being paid for all of his or her hard work. If you are doing work for your parent or loved one, you should be paid. However, you must formalize the payment process through a Family Care Agreement. The Family Care Agreement serves to detail the responsibilities of the family caregiver and turns the agreement to compensate the family caregiver into a legal contract. Absent this formal agreement, it is likely that, upon Medicaid application, the Department of Public Welfare will determine that the payments to the family member were actually gifts and not payments for work. As a result of the “gifts” the parent or loved one will be ineligible for Medicaid and the amounts paid would have to be repaid or the parent or loved one may not be able to get the necessary care.  Please give us a call at 610 933 8069 to set a time to meet and discuss the caregiver contract.

Please review the case below to see some of the issues that went into the determination that payments to a caregiver without a formal contract were treated as gifts that caused Medicaid ineligibility.

Reversing a trial court, a Louisiana appeals court determines that a nursing home resident improperly transferred close to $50,000 to his caregiver nephew and the nephew’s wife because the payments were not made pursuant to a valid personal care agreement. David v. State of Louisiana Department of Health and Hospitals (La. Ct. App., 1st, No. 2014 CA 0791, Dec. 23, 2014).

Widley David entered a Louisiana nursing home in 2008. Between 2008 and 2010, Mr. David wrote six checks to his nephew and his nephew’s wife totaling $49,195. According to Mr. David, the checks were intended to repay his closest living relatives for the daily care that they provided him in the nursing home. When Mr. David applied for Medicaid in December 2010, the Louisiana Department of Health and Hospitals (DHH) assessed a nearly 15-month penalty period due to the transfers.

Mr. David did not appeal the initial imposition of a penalty period, but in July 2011 he requested a change in status from private pay to full Medicaid pay. DHH denied this request, stating that pursuant to the initial denial, Mr. David was ineligible for Medicaid until January 2012. Mr. David appealed the denial of his change in status, arguing that the payments to his relatives were reimbursement for care provided and not to qualify for Medicaid. DHH claimed that the payments would be valid only if made pursuant to a written personal care agreement, which Mr. David had never executed. After a trial court found in favor of Mr. David, the state appealed.

The Louisiana First Circuit Court of Appeal reverses the trial court, finding that the lack of a personal care agreement made the transfers to the relatives improper. The court states 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. The record is void of any evidence that complied with Medicaid eligibility requirements to validate the resource transfers.”

For assistance preparing a Family Caregiver Agreement or developing a comprehensive nursing home asset protection plan in Pennsylvania, please contact Douglas L. Kaune, esquire at 610 933 8069 or email him at dkaune@utbf.com. Doug’s entire practice is focused on elder law, Medicaid Application, estate planning, trust planning, estate administration and protection of clients’ assets from nursing home spending and estate and inheritance taxation. Unruh, Turner, Burke & Frees, P.C. is a full service law firm which has three convenient office locations in Phoenixville, West Chester and Paoli, Pennsylvania. The firm primarily services clients in Chester, Montgomery, Delaware, Philadelphia, Bucks and Berks Counties, but can represent clients throughout Pennsylvania.