How to Pay Family Caregivers Without Delaying Medicaid Eligibility

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By: Bill Henry
PublishedMay 13, 2020
5 minute read

Many people want to pay their family caregiver for their help. However, these payments can hinder future Medicaid eligibility if they’re not carefully made.

Elder law attorney Bill Henry discusses how important caregiver agreements are if you or your loved one will need Medicaid’s help to pay for the nursing home.

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Today we’re talking about personal care services agreements, also called Caregiver Agreements in Colorado and how they work with Medicaid eligibility and nursing home care costs. My name is Bill Henry. I am an elder law attorney with Robinson Henry.

I see these caregiver agreements all the time. People print them off from the internet and unfortunately far too often they do absolutely nothing and in fact they create a ton, a ton of problems.

Let me give you a little bit of background on why these are used first before we sort of get into the details of what needs to go into these caregiver agreements.

Example: Daughter Caregiver Payments

Take an example, let’s say daughter and she’s got a father and her father has dementia and dad’s not in a nursing home yet, but we expect at some point in the future he will be in a nursing home.

But before he goes in, daughter is gonna need to help dad out. Dad’s gonna need a lot of care, helping getting ready, helping going to doctor’s appointments, making dinner, things of that nature. How is daughter going to get paid?

Because when dad goes into the nursing home and he needs help qualifying or paying for that nursing home, then he’s gonna look to a program called Medicaid, which is different than Medicare and Medicaid will pay for dad’s nursing home care costs if he doesn’t have a lot of money. because he’s had an entire life savings and say he wants to compensate daughter for all the things that she’s doing.

The Medicaid Look Back Period

Well, Medicaid is gonna go back through dad’s finances for the last five years and any money that was given to daughter, unless it was done under a caregiver agreement or in some other valid way is gonna be deemed a gift.

So it’s not good enough that daughter just does all these things and it’s not good enough that dad says, “I’m gonna pay you for all these things”, and even if we could prove that daughter did it, if dad just writes a check to daughter, unfortunately that’s gonna be deemed a gift, disqualifies dad from getting any help paying his nursing home care bills for a period of time.

The length of time before Medicaid will pick up the nursing home care bills really just depends on how big that gift was. We could avoid that though, we can pay daughter and we can qualify for Medicaid so those are not mutually exclusive, we can do it, but it’s just, we have to be very particular with how we do it.

How to Pay a Caregiver & Still Get Medicaid

Create Caregiver Agreement

So the first thing we’re gonna do, here’s there’s really eight different things that we need to focus on. First thing we gonna do is we’re gonna create this caregiver agreement and we’re gonna put it in writing, so that’s number one. It needs to be in writing.

Get it Signed

Number two, it needs to be signed by the applicant for Medicaid, that’s gonna be dad. So when dad goes to the nursing home, he is the one that needs the help, he is the one that’s going to apply for Medicaid.

If dad doesn’t have capacity, that’s okay. His power of attorney or his conservator or guardian can sign this caregiver agreement on his behalf.

The caveat though, his daughter can’t sign for dad, so we can’t daughter’s signing for dad and then she signs for herself. That’s not gonna work.

There’s your first two items, so in writing signed by the applicant.

Find an Appropriate Agent

The next one is daughter can’t be dad’s agent. Well what does that mean? That means that daughter can’t be dad’s guardian, can’t be dad’s conservator and can’t be dad’s power of attorney. So she needs to be completely separated from dad if she’s gonna receive any money under this agreement. So there’s three.

Layout Caregiver Responsibilities

Number four is that we need to detail out the type, the frequency, and the time that daughter’s going to spend and what she’s going to do for dad, so what does that mean?

Basically we need to show what is daughter gonna do, how often is she gonna do it, and how much time is she going to spend doing it.

Determine Caregiver Compensation

From there, we go on to number five, so number five is that the payments must be at least monthly.

So in this agreement, we need to list out that daughter will get paid at least monthly.

Number six, we have to say, what daughter is gonna be paid and the amount that she’s allowed to get paid has to be comparable to what other people are paid in the community.

So if daughter happens to be a doctor, she can’t get paid her doctor rate, even though it’s medical services that’s not gonna fly. She can only get paid what other people in the community would get paid.

The amount has to be reasonable and comparable to what other people rendering the same services would get paid.

What would that number be? I mean, minimum wage is always gonna be safe, $15 an hour, you’re probably okay when you start moving up from there, of course, the higher you go, the more likely you’re gonna be challenged under this whole agreement.

Documentation of Help

Finally, number seven, excuse me, there’s two more, so number seven daughter has to keep a log of everything that she does. So we said that dad would write in this agreement what daughter is gonna do, but now she has to actually show what services she did render for dad. So what would that look like?

Let’s say on May 1st she goes over to dad’s house and helps him get changed. Well that would be an example, she would write down, May 1st spent one hour or whatever the case may be, helping dad get ready for the day or helping dad get changed or making dinner, take him to the doctor’s, whatever the case may be, she’s gotta list out those services.

And she can’t list out any services that other people are already getting paid for or would be responsible for. So if somebody else is responsible for taking dad to the doctor’s, she can’t get paid for that.

Formalize the Agreement

So then finally number eight, this agreement has to be notarized. So we have to notarize the agreement, which means that it can’t just be signed by dad. And sometimes I’ll see that everything else is fine, except the agreement wasn’t notarized and that is just not gonna work. It’s gotta be notarized. So there’s your eight items.

Can the Caregiver Get Paid If…?

Well, let’s take two examples that have come up that I’ve seen over the last year. What if daughter rendered services for dad? She did all this stuff for dad. We can prove that daughter did it, but we didn’t sign the agreement for a year so we didn’t get this whole caregiver agreement beforehand.

Can we get paid for those services? Well the answer is no we can’t. We can only get paid for services that we did after the date that we signed the agreement.

What about on the other end? What if instead dad says to daughter in January, “Here, let me give you, I don’t know, $50,000 “to do all these things for me for the next year or two”.

And then a month later he’s gotta go into the nursing home unfortunately, can daughter keep that money? No, all that money that daughter received other than that one month where she did perform services is gonna be countable against dad to disqualify him for Medicaid until that money is either paid over to the nursing home. or a penalty period runs.

Proper Caregiver Payments

Again my name is Bill Henry, I am an elder law attorney with Robinson Henry, if you could do me a favor and share this agreement, I would appreciate it.

Like I said, so often these things aren’t done properly and they really should be. It’s a shame because I know how hard caregivers and children are working for their parents, so it really is appropriate that they do get paid for their time.

It’s just too bad that far too often the agreements are not valid. If you get any questions on this, I know I went over it pretty quickly, feel free to drop me a note and I’ll talk to you next time.

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