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Millions of Americans are currently caring for an elderly family member or friend at home, without receiving regular compensation. Depending on the circumstances, however, it may actually be bene-ficial for both parties to enter into a care contract wherein the caregiver accepts payment for the care they are providing their loved one and also formally assumes responsibility for that care.
Because Medicaid places an extremely low limitation on the amount of assets a Medicaid applicant may have in order to qualify for Medicaid, many people end up spending down the Medicaid applicant’s as-sets to the poverty level of $2,000.00 before applying for Medicaid. This then leaves nothing to compen- sate for the vigorous advocacy helpless individuals need.
By entering into a Care Contract a Medicaid applicant can pay someone to be a vigorous advocate for them and see that they are well taken care of by the professionals who provide the day to day hands on care. There are many tasks in addition to the simple assistance with activities of daily living that are also beneficial to incapacitated individuals. These services can also be provided to improve the individual’s quality of life.
With the Care Contract in place a Medicaid applicant can pay their care giver, provided that the contract meets Medicaid standards, will not count as an asset when calculating the applicant’s assets for eligibility purposes.
Currently, there is some discussion going on by Medicaid to make changes in the rules governing Caregiver Contracts. At this point it’s all just a matter of discussion. However, because it is being discussed the issue should be watched carefully before drafting these Care Contracts.
Having a Care Contract in place also ensures Medicaid will not impose penalties on the money received by the caregiver. Sometimes, an elderly person will randomly give sums of money to their caregiver as payment for the care they provide. Without a contract in place, Medicaid will assume the money transferred is a “gift” or a “transfer of assets” and will impose penalties resulting in ineligibility for Medicaid benefits.