How Can Personal Care Contracts Help Me Qualify For Medicaid?
If you are approaching or are older than 65 years old, you have probably given some thought to how you will pay for medical care as your needs increase with age. Even after a little homework, you may be disappointed to find that your options are limited when it comes to the US government’s needs-based public health program: Medicaid. Centers for Medicare and Medicaid Services (CMS) have established extremely strict Medicaid eligibility rules, and the two could have a considerable impact on your future:
- Medicare does not pay for long term care.
- Being needs-based, you must have assets and/or income under the minimum thresholds to qualify for Medicaid.
Many Floridians are aware of how a properly crafted trust or other estate planning strategies can help with Medicaid. What you might not know is how personal care contracts can play a role. A Dade City elder law attorney can provide details on the benefits, but some answers to FAQs are helpful.
What is a personal services contract?
This is an agreement between someone applying for Medicaid and a designated caregiver for basic, non-medical living services. The caregiver is often a family member or close friend, who can handle such tasks as:
- Transportation to and from doctor’s appointments;
- Assistance with cooking, cleaning, and personal hygiene;
- Meeting with elder law attorneys;
- Picking up medications and running errands; and,
- Other tasks that caregivers would charge for if they did not have a relationship with the Medicaid applicant.
Why would I consider executing a personal care agreement?
Your caregiver is entitled to payment just as any other service provider. Therefore, you could use a personal care contract to spend down assets while also working your caregiver into your estate plan. For instance, if you were to transfer $20,000 to your child within 5 years of applying for Medicaid, it would be considered a gift. The amount would be treated as your own asset for purposes of the lookback period, and you would be penalized. Transferring this amount to pay for a personal care contract is NOT a gift, as long as:
- The parties sign a written agreement laying out the terms of the personal care services; and,
- The caregiver actually provides services according to the agreement.
How much is a fair price to pay a caregiver?
The amount is usually paid in a lump sum in advance. The basic formula that Medicaid will accept as reasonable is the fair market hourly rate for the caregiver’s services, multiplied by the number of hours per week. Then, you refer to the weeks per year for the Medicaid applicant’s life expectancy. Fees could be higher for a professional care manager.
A Pasco County Elder Law Attorney Can Provide Additional Answers
This information on personal care contracts is useful, but attention to detail is critical to ensure you leverage the benefits for Medicaid planning. To learn more, please call 352-567-0055 or go online to reach The Law Office of Laurie R. Chane in Dade City, FL. We can set up a consultation to review your situation and explain Florida elder law issues.