Making informal payments to compensate a child for caregiving can jeopardize a parent's future Medicaid eligibility. A Personal Service Contract, also known as a Personal Services Agreement, is a better strategy.
Increasing numbers of adult children provide caregiving for aging parents
More and more older people are being cared for by adult children or other relatives. This is often a labor of love and can ensure the best possible care for the parent. However, it may also come at some financial cost to the caregiver, who must trim work hours or leave a job entirely, incur other expenses, and delay retirement saving. To cushion these financial losses, a parent may wish to pay a loved one for services rendered.
How you compensate the caregivier is important vis-a-vis Medicaid eligibility
Paying a caregiver directly - without a formal agreement - can backfire in terms of Florida Medicaid eligibility. If a parent's health declines and he/she applies for Medicaid long-term care benefits, caregiver payments that fall within the look-back period may be considered to be a gift, if not properly documented. (The current Florida Medicaid look-back period is five years prior to the date of application.) Even if the parent qualifies for benefits in all other respects, payment made during the look-back period may cause denial of benefits for a period of time. This is what occurred in the case of Widley David, a Louisiana resident whose nephew provided caregiving to him from 2008 through 2011. During that time, Mr. Widley wrote several checks to his nephew to compensate him for caregiving, for a total of $49,000. When Widley's health deteriorated and he applied for Medicaid benefits, the payments were deemed to be gifts, and Widley was denied any benefits for 14 months.
Personal Service Contracts can avoid the Medicaid eligibility problem
Using a Personal Services Contract to pay a caregiver can help preserve future Medicaid eligibility. A Personal Services Contract, also known as a Personal Services Agreement, is a written, formal, structured contract that specifies the scope of the caregiver's duties, number of hours of assistance to be provided, and the rate of compensation. The contract must comply with Florida Medicaid law. The caregiver must supply the required assistance, declare the income on his income tax return, and pay Social Security self-employment tax..
Consult a Florida Bar Certified Elder Law Attorney
For more information on Personal Services Contracts and Florida Medicaid, be sure to consult with a Florida Bar Certified Elder Law Attorney.
Our Rating is calculated using information the lawyer has included on
their profile in addition to the information we collect from state
bar associations and other organizations that license legal
professionals. Attorneys who claim their profiles and provide Avvo
with more information tend to have a higher rating than those who do
What determines Avvo Rating?
Experience & background
Years licensed, work experience, education
Legal community recognition
Peer endorsements, associations, awards
Legal thought leadership
Publications, speaking engagements
This lawyer was disciplined by a state licensing authority in .
Disciplinary information may not be comprehensive, or updated. We recommend that you always check a lawyer's disciplinary status with their respective state bar association before hiring them.