Can Family Members Be Paid for Providing Care to a Parent or Relative Without Disqualifying Them From Medicaid?

Quick Answer

Yes, but only if it is documented properly and in advance. A written caregiver agreement, signed before the care starts, at a reasonable rate, with records kept. Money handed to a daughter informally and called payment after the fact is treated as a gift, and gifts create penalty periods.

The situation this comes up in

A daughter cuts back to part time to look after her mother. Or moves in. Or drives across town twice a day for two years.

Mom wants to pay her something. It is fair. The daughter gave up income and the family knows it.

Guess what happens when a Medicaid application gets filed two years later? Every one of those transfers surfaces in the five year review, and without documentation the state has no way to distinguish payment for services from a gift to a child.

So it treats it as a gift.

Why that is expensive

A gift inside the look back can create a penalty period. What that means is a stretch of time where Medicaid will not pay for care even though the money is already spent.

The biggest thing I want you to realize is the timing of that penalty. It does not start when the gift was made. It starts when the person is otherwise eligible and applying, which is precisely when the family has the least money and the most bills.

So the daughter got paid, the money is gone, and now the family is private paying anyway during the penalty.

What a proper caregiver agreement involves

It has to be in writing, and it has to exist before the care and payment begin. Retroactive agreements do not fix history.

The rate has to be reasonable for the services in this market. Paying a family member well above what an agency would charge invites the conclusion that the excess was really a gift.

The services need to be described with enough specificity that somebody reading it later understands what was actually being purchased. Hours, tasks, frequency.

And records have to be kept. Time logs, payment records, and the caregiver reporting the income, because payment for services is income and treating it as invisible creates a different problem with a different agency.

The common mistakes

Paying cash with no paper. Writing the agreement after the application is denied. Setting a rate somebody picked out of the air. Having the parent sign it after capacity is already questionable, which can invalidate the whole thing.

The Georgia piece

Georgia’s five year look back is what makes documentation matter so much, because the review reaches back across the exact period when informal family arrangements tend to happen.

Georgia is also an income cap state, so if the parent’s income runs over the limit a Qualified Income Trust comes into it as well. That is the Miller trust, the conduit the income passes through.

A note on how to use this

This is being presented for educational purposes only and is not legal advice. Whether a caregiver arrangement will hold up depends entirely on the documents, the rate, the timing, and the facts of your family’s situation. I am only licensed in Georgia and Michigan. Rules and figures change.

If you are in another state, get the foundation and then find a wealth protection attorney in your jurisdiction.

Your next step

If a family member is already providing care, or is about to start, schedule a complimentary 15 minute Strategy Session by calling 404-549-5001. This is much cheaper to set up correctly than to fix later.

Ask about “Becoming the CEO of Your Parent’s Life” if you are the adult child carrying this.

Related questions

• How do I protect my resources and qualify for Medicaid?
• Are you obligated to pay your parent’s medical and care costs if they cannot in Georgia?
• How can I protect my parent’s assets if they need to be admitted into a nursing home?
• How does Medicaid define assets within the qualification process?

   

Looking to find an experienced estate lawyer in the Georgia area who is skilled in asset protection and estate plan preparation? Shannon Pawley is an attorney in Georgia with expertise in estate planning and asset protection. Shannon can provide assistance with creating an estate plan to include making a will and how to establish a trust properly. If you have questions about asset protection or questions about making an estate plan, reach out to Shannon and she will be glad to help answer all the estate planning questions you might have!