If you are currently providing in-home care for an elderly family member without receiving financial compensation, it may be in you and your loved one’s best interest to enter into a caregiving contract where you are paid for your services and formally assume responsibility for care.
This is because, if your loved one reaches the point where nursing home care becomes necessary, they will not be eligible for Medicaid benefits until all of their assets have been spent down to $2,000. With a care contract in place, every dollar spent to pay for the caregiver will count towards the Medicaid spend down. Without a contract in place, any payments made to the caregiver will be considered “gifts” and will result in a Medicaid penalty or denial of benefits.
If you have been caring for a parent for at least 2 years, the Medicaid rules allow that parent to transfer their home to the child caregiver without incurring any Medicaid penalties. This is known as the ‘Child Caretaker Exemption”. It allows for the transfer of a home to a child over the age of 21 who has lived at the parents’ house for at least 2 years and provided care so that nursing home care was not necessary.
Essentially, if you are caring for a loved one, a caregiver contract is highly recommended. Before entering into a contract, be sure to contact an experienced elder law attorney.