When a widowed or divorced parent needs care, a written caregiver agreement may help with Medicaid planning. This article describes Sally Johnson’s situation, and if you’re in this situation much of this may apply to you, too.
Let me tell you about Sally Johnson. She feels worn out. Four years ago her father died and for the past three years she has been caring for her aging mother.
At first, it was little things . . . grocery shopping, trips to the doctor, help with her medication, things like that. But as her mom’s health deteriorated, Sally’s burden has increased. The last six months have been brutal. That’s because Sally had to move her mom to a nursing home. Mom couldn’t live at home any more.
Sally thought her job would be easier once the nursing home staff took over, but it hasn’t turned out that way. As the oldest daughter, Sally still feels responsible, even though technically, someone else is now responsible for Mom’s care. Sally feels like she has to be there. So she visits her mom six days a week.
Sally is running herself ragged and Mom is running out of money. Mom has about $50,000 left, and at $6,000 per month for the nursing home, Sally knows Mom’s money won’t last long. When the money runs out, who will be there to pay for Mom’s nursing home? Sure, Sally has heard Medicaid will cover the nursing home, but she’s also heard Medicaid won’t cover everything. What then?
When she comes to see you, Sally is quite distraught. “Is there anything else I can do?” “Yes,” you tell her. There are steps she can take.
Perhaps given Sally’s high degree of involvement, a personal care contract should be considered. You explain that Sally and her mom can enter into a formal agreement where Sally becomes Mom’s care manager. Even though Mom is in the nursing home, if done properly, Mom can pay Sally for her care management services.
For example, if Sally spends approximately 1 ½ hours per day caring for Mom, that’s nine hours per week (i.e. six days per week times 1.5 hours per visit.) Mom can agree to pay Sally $15 per hour, or $135 per week, for her services.
Using a Care Contract could allow Sally to provide Mom the care she needs and still allow Mom to qualify for Special Assistance (for assisted living) or Medicaid (for a nursing home).
You explain to Sally that you have given her the “short version” and that this type of planning must be handled in a very specific manner. There are tax considerations to note, and the contract must meet the requirements of Medicaid so that it is not treated as a gift for Medicaid purposes. Still,when done properly, this can be used to solve Sally’s dilemma and to preserve some of Mom’s funds in case they are needed after Mom is in a nursing home. Sally is relieved. You have shown her how she can make a smooth transition from caregiver to care advocate.