If someone is providing services in furtherance of a loved one’s care, a personal care contract (also known as a caregiver agreement) could be appropriate. Compensation of a personal caregiver for time and services is an allowable expense for Medicaid purposes if the contract is prepared for future services and the rate of compensation is for fair market value, depending on the level of expertise. Please note that the income generated from a personal care contract is taxable to the caregiver.
Examples of services that may be compensated under the contract are:
Periodic health assessments
Consulting with health care providers
Securing health care services
Monitoring health care providers
Periodic assessments of personal needs, supplies, and equipment
Visitations
Securing social services
Shopping for personal hygiene goods and services, clothing, shoes, hobby, and entertainment items
Financial management
Dealing with others regarding personal affairs
Communications with others
Addressing resident rights issues
Attending to special requests of individual, like dietary requests, or corresponding with family and friends
Attending to mail
Depositing monthly income
Taking individual on trips
Taking or arranging for individual to visit friends or relatives
Arranging outings, like dinner out
Prepare and file income tax returns
The personal care contract is not available in all planning situations. Factors that must be considered when evaluating whether and to what extent a personal care contract may be used include:
A child caregiver that is providing care on an intermittent and irregular basis.
A parent or other loved one is of sufficiently advanced age that the life expectancy tables mandate the use of a very short life expectancy.
Extensive assets that cannot be fully spent on caregiver services will require that other planning strategies be used in conjunction with the personal care contract.
Out of state children caregivers will be more highly scrutinized by Medicaid.
Services provided while an individual is residing in a Nursing Home will be more carefully scrutinized by Medicaid, and in some instances disallowed completely by the Medicaid agency.
Using a Personal Care Contract for VA Aid and Attendance Purposes
A personal care contract may be used in an Aid and Attendance eligibility case to document care being provided by a private caregiver. For example, if a child is providing assistance with activities of daily living, a contract can be drawn up that explains the services the child is providing, the hourly rate being paid for those services, and the frequency of the services.
A personal care contract should only be used for care that has been recommended or prescribed by the claimant’s treating physician. Unlike a personal care contract used for Medicaid planning purposes, which outlines personal care services (rather than medical care being provided), a personal care contract for Aid and Attendance purposes describes care that is being provided pursuant to a doctor’s recommendation. In addition, it documents the payment of unreimbursed medical expenses, which can in turn reduce a claimant’s income for VA purposes (IVAP).