Many of my clients with aging parents spend a great deal of time, energy and money helping their parents maintain their independence by living at home. Those who are planning ahead for MassHealth eligibility, are also concerned with helping to manage their parent’s assets while not running afoul of MassHealth’s strict asset transfer rules. Together, this can be a daunting task for anyone. Creating a personal care contract can help ease the financial strain this assistance can put on the care taker and help the elder ‘spend down’ their assets to qualify for MassHealth (Medicaid) in the future.
A personal care contract is a legal agreement, often between a parent and child, that documents the care services the child will provide to the parent, thus enabling the elder to remain living in the community. In return, the parent agrees to pay the child a reasonable rate for services rendered. While seemingly straightforward, these contracts have caused some confusion in the past because MassHealth has not provided specific guidance on how a personal care contract should be structured. In fact, MassHealth has in some instances sought to characterize personal care contracts that were not properly structured as illegitimate transfers despite federal law and agency policy mandating that services be provided in the community where possible, rather than in nursing homes.
Recently, however, the Massachusetts legislature has taken up a bill (House Bill H01097) that, if enacted into law, would codify personal care contracts and set out their specific requirements. These would include:
(1) the contract must describe the type, frequency and duration of the services being provided and the amount of consideration being paid to the caregiver;
(2) the personal care services must enable the elder to avoid or delay placement in a nursing facility or return from a nursing home to the community, as determined by a licensed medical professional or a licensed social worker;
(3) payment must be reasonably based on the fair market value of the actual job performed and the qualifications of the caregiver; and
(4) any lump sum payment for services to be provided in the future, will be considered a valid transaction as long as the payment is calculated based upon the elder’s life expectancy and the contract requires the return of any prepaid monies if the caregiver services are not rendered.
I regularly draft all care giver contracts in line with these regulations as well as other requirements set out by MassHealth to ensure that seniors are in the best position possible should they need MassHealth services. In addition, a personal care contract can be a great way to recognize the efforts of a care giver and avoid potential conflicts that can arise after the elder has passed on and reimbursement is sought from the will. By paying a care giver child, elders can stay home longer and contribute toward their living costs. If you are interested in exploring this mutually beneficial arrangement, call us for a free consultation.