An increasing number of individuals are entering into personal service arrangements with family members to provide for their physical care. Such arrangements can be very rewarding for both parties: the elderly individual receives care from a person they know and trust, and the caregiver is compensated for their time and effort. However, oftentimes these arrangements fail to move beyond verbal agreements and are never memorialized on paper. While the lack of documentation may not bother family members at first, a recent Louisiana case illustrates why the lack of a written agreement can jeopardize the individual’s Medicaid eligibility in the future.
Wiley David moved into a care facility in 2008. Over the next two years, he wrote checks totaling just under $50,000.00 to his nephew and his nephew’s wife. The couple had provided daily care to Mr. David in the nursing home, and the checks were used to compensate them for their work. His nephew even went so far as to quit his regular job to provide continued care to his uncle. But most significantly, the parties never executed a formal agreement.
When Mr. David later applied for Medicaid, state officials argued that the checks were not intended to compensate the couple for their services, but rather to transfer money in an attempt to qualify for Medicaid. Because of these transfers, Mr. David was penalized and forced to wait 15 months before qualifying for Medicaid.
State officials noted that had there been a formal caregiver agreement between the parties, the payments would have been valid and not incurred a transfer penalty. Mr. David’s case was appealed all the way to the state appellate court. The court determined that without any documentary evidence of an agreement between Mr. David and his nephew, the checks paid to his nephew and his wife were improper transfers resulting in a 15 month penalty period.
This case illustrates the importance of executing a formal caregiver agreement between the elderly individual and their caretaker. Failing to do so may result in a penalty period should they later apply for Medicaid. At Pearson Bollman Law, we frequently assist families with drafting and executing caregiver agreements. We pride ourselves on creating an agreement that fits your unique situation. For more information on caregiver agreements and how you can establish one for your family, please give us a call.