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When It's A Child's Turn to Take Care of Mom or Dad
A Caregiver Agreement May Be in Order

By David Cutner
(Page 2 of 3)

Sometimes, siblings are unable or unwilling to help with caring for Mom or Dad. It is easy to see that, when this happens, resentments may arise and relationships among brothers and sisters can become strained. The Caregiver Agreement can minimize these resentments and conflicts because the child who is providing the care is being fairly compensated for his or her time and effort. Other siblings can then be relieved of their guilt or embarrassment about not participating since the caregiver child is being paid.

Legally, there may be a significant bonus for Mom or Dad in creating a Caregiver Agreement. The agreement can be a very useful planning tool in cases where it is appropriate to seek assistance from Medicaid. This is because Medicaid eligibility is based on the applicant’s resources (currently the applicant can have no more than $13,800 in assets), and gifts or transfers of assets may subject the applicant to a Medicaid penalty. It may be possible and appropriate in some cases to reduce the Medicaid applicant’s resources to the eligibility level by funding a Caregiver Agreement with a large advance payment, thus providing primary care through Medicaid and supplemental care under the agreement. Funding of the Caregiver Agreement will not result in a Medicaid penalty (if the agreement is properly prepared) because the payment is a fee for services, not a gift or transfer of assets.

To put this issue in context, it must be understood that Medicaid will “look back” at the applicant’s financial transactions over the five (5) preceding years to determine whether the applicant made any gifts or transfers. If a gift or transfer occurred within the look back period, then Medicaid will apply a penalty, which will be a period of time during which the applicant is ineligible for Medicaid benefits. In New York, the look back period applies only to Medicaid nursing home applications, so the home care applicant does not have to worry about penalties if he or she has transferred assets. In other states, however, the rules may be different.

If you are thinking about entering into a Caregiver Agreement, you’ll want to be aware of the factors that will determine whether the agreement is Medicaid compliant.

First, it is imperative that the agreement be a formal written document that sets forth the duties and responsibilities of the caregiver, and the method of calculating the caretaker’s compensation. Compensation should be in line with the fair market cost of similar services in the same geographic area.


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