Personal Service Contracts Can Avoid Jeopardizing Florida Medicaid Eligibility
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 parentsMore 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 eligibilityPaying 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 problemUsing 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 AttorneyFor more information on Personal Services Contracts and Florida Medicaid, be sure to consult with a Florida Bar Certified Elder Law Attorney.