A personal care agreement can benefit New Jersey families

by | Sep 6, 2018 | Elder Law, Firm News |

When a person’s parents reach an age where they need help with their daily care activities, oftentimes their children step up and serve as caregivers. They do this out of love for their parents and, in general, do not expect to be paid.

However, this situation can become more difficult if an adult child must care for their aging parent for many years or if their parent’s needs require professional support. Medicaid is often seen as an option for paying for long-term care. However, the care recipient cannot have more than $2,000 in assets if they are unmarried in order to qualify for Medicaid.

A caregiver in New Jersey might wonder if they could be reimbursed for the years of care they provided to their parent. However, retroactive payments like this are deemed to be a gift, rather than a reimbursement for services provided. Reimbursements can actually end up lengthening the amount of time a person needs to wait before they qualify for Medicaid.

However, there is a way a caregiver can receive compensation without affecting their parent’s eligibility for Medicaid benefits which is through the execution of a written personal care agreement. This contract is between the parent and adult child. The agreement must be executed before the adult child begins caring for parents. It must detail what care services the adult child will provide for compensation and what services the adult child will not be compensated for. The agreement must explicitly state the rate of compensation provided and show how the compensation is comparable to that a professional caregiver in that area would charge. Both the parent and the adult child must sign and notarize the contract.

It is essential that the adult child maintains a log of what caregiving services they performed and when, and how they were compensated. This log serves as proof when their parent applies for Medicaid that these payments were in fact for necessary care services, rather than a means to simply reduce their assets.

Caring for an aging parent is an act of love, but eventually people can anticipate that professional care will be necessary. In situations like this, adults caring for their parent will want to give the matter some forethought and potentially execute a personal care agreement. However, in order to ensure the agreement does what they want it to, it can help to enlist the aid of an elder law professional.