Every year, millions of American families are faced with an impossible decision: what to do when a loved one requires care, but cannot afford private-pay facilities and has too much money to qualify for Medicaid long-term care assistance? In this situation, many turn towards family members for caregiving support.
34 million Americans serve as unpaid family caregivers, and according to a 2021 AARP study spend an average of 26% of their annual income on caregiving-related costs. In Florida, Medicaid will not pay for long-term for individuals who have more than $2,000 in assets.
In order to become eligible for Medicaid long-term care support, many families will look towards a Medicaid spend down, wherein people spend down their assets until they hit the eligibility threshold for Medicaid long-term care coverage. Many aging individuals would hope to gift these assets to family members, however that’s unfortunately not possible without at least five years of advanced planning
As AARP explains, “When determining Medicaid eligibility, states are required by federal law to ascertain whether an applicant transferred assets for less than fair-market value during the 60 previous months, and for California, 30 months.” This is known as the look-back period, and prevents aging individuals from transferring assets to relatives once the need for long-term care becomes apparent. Instead, assets must be spent on healthcare and living costs, until the applicant’s assets are low enough for Medicaid eligibility to kick in.
Please see Aidaly’s guide to the Medicaid five year look back period and to spending down assets for Medicaid for more details.
Personal Services Agreements
Fortunately, in Florida another solution exists. In Florida, personal services agreements allow an individual to legally pay their relative for caregiving work – thereby transferring assets to a loved one while also following the letter and spirit of Medicaid’s eligibility rule requiring that assets be spent down on care. A personal services agreement is an employment contract between a care recipient and caregivers; this is often a child, but can also be another non-spousal relative. This preserves Medicaid long-term care eligibility, as these payments do not violate the Medicaid five year look back period as an equivalent monetary gift would. According to the American Council on Aging, “A personal care agreement legitimizes the reason payments are being made to the individual, or stated differently, offers proof that money is being paid by the Medicaid applicant for receipt of care services.”
The personal survive contract “clarifies the relationship between the caregiver and care recipient, establishes clear expectations as to what services are to be provided (i.e., personal care assistance, transportation to physician appointments, and housekeeping), states when and where care will be received, and includes the care recipient’s rate of pay and frequency of payment. Essentially, personal care agreements protect all parties involved,” as the American Council on Aging continues.
Once a personal services agreement is executed, caregivers become legally obligated to provide care to their care recipient.
Getting Paid as a Family Caregivers With Personal Services Contracts
In exchange for their care services, the care recipient commits to paying the caregiver an agreed upon amount, similarly to how an employment contract functions. AARP explains: “The money may be made in periodic or installment payments or in a bulk/lump sum payment. The contract can also act as an IOU for future payments. How the payments can be made will depend on what your state’s laws allow. Do not attempt to make retroactive payments — the contract cannot cover services the caregiver provided in the past.”
The compensation must be for a reasonable, market-rate amount, equivalent to the level of care provided. We recommend looking at your city’s median salary for homemaker services, which most commonly represents the duties – such as cooking and driving to appointments – performed by a family caregiver. In Miami, the 2021 medium hourly rate of homemaker services was $22, according to Genworth’s cost of care survey. This will count as taxable income for the caregiver.
If an advanced, bulk payment is made, it has to be calculated based on the care recipient’s estimated life expectancy and the level of care the caregiver will provide until then. When your care recipient applies for Medicaid long-term care coverage, Medicaid will review the documentation, so make sure the contract is legally executed correctly, and that the fee paid to the family caregiver is at or below an easily justifiable amount. We recommend working with an eldercare attorney in your state to ensure you are executing this agreement according to the best practices in your state.
Aidaly Pays Family Caregivers
Many aging individuals do not have sufficient funds to pay their family caregivers via a personal services contract; rather, they need their assets and income to cover their living and healthcare expenses. Aidaly solves this problem, and helps family caregivers get paid for the work they already do. If you are a family caregiver and would like to explore getting paid for your work, please apply today. Qualifying for benefits is easy – you just need to provide us with some basic information and we’ll take care of the rest!