December 26, 2018
Personal Care Contracts and Michigan Nursing Home Medicaid | Berry’s Bites
Certified Elder Law Attorney, Christopher Berry, discusses the need for a Personal Care Contract when you are caring for a loved one and being paid. Without a personal care contract the payment could be ruled a divestment.
Hello. This is certified elder law attorney Christopher Berry and today what I want to talk about is care contracts, specifically as it relates to Medicaid planning. As you are probably aware, we have a governmental program called Medicaid that will help pay for nursing home costs. But to qualify for Medicaid there is an asset test involved, where a single individual can only have $2,000 worth of countable assets. And countable assets are basically everything other than a home, small cash value of life insurance, personal belongings, and a pre-paid funeral.
Personal Care Contracts and Michigan Nursing Home Medicaid Transcript:
Hello. This is certified elder law attorney Christopher Berry and today what I want to talk about is care contracts, specifically as it relates to Medicaid planning. As you are probably aware, we have a governmental program called Medicaid that will help pay for nursing home costs. But to qualify for Medicaid there is an asset test involved, where a single individual can only have $2,000 worth of countable assets. And countable assets are basically everything other than a home, small cash value of life insurance, personal belongings, and a pre-paid funeral.
Now, for someone to qualify for nursing home Medicaid, they’re also going to look back five years to see if you’ve gifted or moved any money around, and this is where personal care contracts become part of the planning process. A lot of times, when people get to the point of needing longterm care, they don’t just go straight into a nursing home, they start off first receiving care at home. And that care at home could be a from a spouse or it could be from family members or it could be from friends. But one of the key ingredients is that we need to have what’s called a personal care contract. And what this is, is a document that allows us to pay that individual for their care, because otherwise Medicaid is going to look at that transfer, that monthly movement out of that person who may need care, out of their name to someone else’s name. Unless it’s moved to an agency or there’s an invoice involved, something like that, then they’re going to view that as a gift.
It’s very important that we have a personal care contract in place. Now, understand it has nothing to do with a person’s taxes as it relates to the money that they receive, whether they declare the taxes or not has nothing to do with a personal care contract, but what this document does is just protect that person who may need care from that Medicaid lookback or the Medicaid offices saying that those transfers of moneys were gifts. So it’s vitally important that if we are paying someone for care that we have a personal care contract in place, otherwise Medicaid will say that’s a gift and they will penalize that individual.
This has been Chris Berry talking to you about personal care contracts as it relates to Medicaid.