With a growing number of adults providing substantial care to an aging parent, adult children should keep in mind the importance of executing a contract to formalize the arrangement, if Medicaid eligibility is a consideration.
This is because, in the absence of a formal agreement, Medicaid will consider services that a child performs for a parent to be done for “love and affection,” with no expectation that the child is to be paid for the services. Therefore, without a formal agreement in place, Medicaid will consider transfers of funds made from the parent to the child for these services to be gifts, and will impose a Medicaid period of ineligibility for the transfer(s).
A caregiver contract must be drafted carefully, and it cannot provide for payment for services the child has performed in the past.
If you would like further information regarding caregiver contracts, feel free to contact Vanarelli & Li, LLC.