August 2020 Newsletter
Tuesday, August 11th, 2020
From The Certified Elder Law
William W. “Bill” Erhart
Caregiver Agreement: Compensating Family Members Fairly and Preserving Medicaid Benefits.
Many of us are not receiving long term care Medicaid, but contemplate we may need such long-term care in the future. Sometimes citizens have cash resources that
exceed the Medicaid limit. At the same time, family members, typically the eldest daughter, are providing care out of their own time and resources, which is
burdensome to the caregiver and guilt giving to the parent. If the parent gives the caregiver's child money or leaves more to that child upon the parent’s death, other
children may not understand. A Caregiver Agreement is a solution to these several issues.
Medicaid is a joint federal and state program which provides payment for medical services to eligible individuals. It is designed to provide for those “whose income and resources are insufficient to meet the costs of necessary medical services.” 42 U.S.C. sec 1396(1). Among other requirements, Medicaid applicants may have no more than $2,000.00 in available resources. If an applicant makes a transfer of resources for less than fair market value during the five year look back period, under 42 U.S.C. sec 1396p (c)(1)(B), then an application for long term care benefits is denied and a period of ineligibility imposed. 42 U.S.C. § 1396p (c) (1)(A). Long- term care for the elderly is expensive and significant care is provided in the home by family members, mostly women. It is reasonable, and some assert necessary, that such family caregivers be compensated for the care they render to family members. For example, it is proposed to provide an elective share to a family member who provides substantial uncompensated care in a family residence to a decedent.
Thomas P. Gallanis and Josephine Gittler, Family Caregiving and the Law of Succession: A Proposal. 45:4 University of Michigan J. of Law Reform 761 (2012). A traditional elective share is only available to the surviving spouse under current law. Encouraging family members to provide care for the elderly within the home by compensating the family member by use of a formal Caregiver Agreement benefits the caregiver, the elderly, and the State which is otherwise burdened by paying for long term care through Medicaid. See, Eldercare for the Baby-Boom Generation: Are Caregiver Agreements Valid? 45 Suffolk U. Law Rev. 1271(2012).
Unlike the Massachusetts scheme examined in the Suffolk note, Delaware has no regulation governing Caregiver Agreements. Payments to family members are presumed to be transfers in order to qualify for
Medicaid and subject to the divestment penalty. Caregiver Agreements formalize the arrangement between a child and parent to evidence the payment is for value and not a disqualifying gift under Medicaid. See generally, Frolik & Brown, Advising
the Elderly or Disabled Client, §§ 14.02, 16.12 (Thomson Reuters/WG&L, 2020); Brewton v. Dept. of Health & Hospitals, 956 So. 2d 15 (La. Ct of App. 2007); Reed v. Dept. of Soc. Serv., 193 S.W.3 rd 839 (Mo. Ct of App. 2006); Forman v Dir. of Medicaid, 944. N.E.2d 1081 (Ma. App. 2011).
Typically, a child is currently bathing, dressing, toileting, providing incontinent care, transporting, shopping, laundering, making meals, housekeeping, and
monitoring medication daily for the parent. There is no reason why the child should not be compensated for the care provided; the parent benefits from the care, the
parent retains Medicaid eligibility by evidencing fair market value for the services rendered by the child caregiver, and the State benefits by the child providing care for the parent in the home and deferring institutional long term care and Medicaid at the expense of the State. Caregiving Agreements can be combined with other asset preservation techniques which help elders and their families.