Many adult children in Maryland choose to take care of their elderly parents, rather than hiring a caregiver or placing their parent in a nursing home. This may be done out of love and affection, and generally no money is exchanged between the adult child and their parents. However, this can cause problems down the road if the adult child can no longer meet their parent’s needs and needs their parent to qualify for government assistance with the costs of long-term care, such as Medicaid.
Reimbursement for care
An adult child may wonder if they can be reimbursed by their parent for the care they previously gave their parent, allowing their parent to spend down their asset for Medicaid eligibility purposes. Unfortunately, a retroactive payment in such situations will be considered a monetary gift. This could violate Medicaid’s five-year “look-back” period, leading to a delay in Medicaid eligibility.
Personal care agreements
Because a retroactive payment can negatively affect your parent’s eligibility for Medicaid benefits, it is important before you begin caring for an ailing parent to execute a written agreement that provides you with compensation for the services you provide. An oral arrangement may still be considered a gift, so it is important to explicitly document the pay you are to receive for your caregiving services in a written “personal care agreement” before you begin caring for your parents.
Personal care agreements should include provisions outlining which services you will be compensated for and which services you will not be compensated for. Both you and your parents should sign the agreement. The agreement must have a contract date, and the rate of pay should be similar to what would be paid by a commercial care provider in your area. Caregivers should make sure they maintain a log of services provided and payments received.
Learn more about Medicaid planning
Ultimately, a personal care agreement is a legal document, so it can help to consult with an attorney before one is drafted. This post does not contain legal advice. Those who need further information on this and other elder law issues in Maryland may find our webpage on Medicaid planning useful.
