Many adults end up caring for their aging parents (or other aging family members). Is it a good idea for the caregiver to be paid for these services? What are the legal consequences?
While persons can legitimately be paid for care they provide to a family member, Medicaid law presumes that services provided for free at the time they were rendered were intended to be provided without compensation. This presumption can be rebutted if a contract was entered into at the time the services were provided.
If a parent is amenable to paying for caregiving services that will be provided, a personal care contract could be entered into that provides that the caregiving child will be paid fair market value for the services.
The contract would serve as tangible evidence that the parent intended to pay the caregiver for the services. The contract should detail the nature, extent and fair market value of the services as well as all other material terms. The compensation may be structured as periodic payments or as a lump sum based on the parent’s life expectancy. A properly drafted personal care contract, particularly if it uses a lump sum payment method, can be a technique to transfer assets without incurring a penalty period for Medicaid benefits. Such a contract can give a parent the contractual right to receive ongoing care instead of having to rely on a moral obligation. In addition, the caregiver would have a way to replace income that may be lost. Any compensation the caregiver receives must be reported as taxable income. Tax and other filing requirements apply.
Medicaid also has a home care program commonly known as the CDPAP (Consumer Directed Personal Assistance Program) whereby a child could be paid by the government for personal care services provided to a parent.
The attorneys at Kurre Schneps LLP can make sure a personal care contract is properly drafted and administered and also explain the process of enrolling a child or other caregiving relative in the CDPAP.
