Transfers of assets generally raise a red flag when it comes to applying for Medicaid. They can trigger a penalty period, or a period of ineligibility.
The good news is the Connecticut Department of Social Services (DSS) will allow certain types of Medicaid asset transfers. For example, a family caregiver can be compensated for providing care to a loved one if the care they provide is necessary.
The rationale is this: DSS recognizes that when family members pitch in and provide needed care for a loved one, they are helping that person delay or avoid placement in a nursing home.
Making a caregiver agreement
Although your loved one can’t just give away his or her money to qualify for Medicaid, he or she can pay a family member who is providing care without jeopardizing eligibility for Medicaid. An individual must demonstrate a functional need for assistance with one or more activities of daily living. The type of care provided must be spelled out in a caregiver agreement, and certain conditions must be met.
DSS conditions that must be met
- Compensation must be received in accordance with a legally enforceable agreement. This agreement, called a “caregiver agreement,” spells out all the details of the arrangement, just as if your loved one was hiring an outside agency instead of you. The kinds of things that might be included, depending on the situation, would be:
- The person providing care
- The location where the care will be provided (i.e. caregiver’s home or care recipient’s home)
- The type of care provided, i.e. chores, transportation, meal preparation, medication management, etc.
- The number of hours per week
- The hourly rate
- The schedule and method of payment
- DSS specifies specific rates if the services provided fall into the category of homemaker or home health aide. The rate is the established current minimum wage for these types of services.
- For all other types of services, the actual cost is used.
- Compensation in the form of real or personal property is calculated using its fair market value.
- If individual receiving care resides with the caregiver, payments can be made for home improvements necessary to allow him or her to remain in that home and avoid institutionalization. This includes things like adding a bathroom to the main level of the home, or installing a wheelchair ramp, grab bars or a stair lift.
- The caregiver must keep an accurate record of services provided, by logging time in a daily timesheet, for example.
Create an agreement before you start
A key thing to keep in mind is that the caregiver agreement cannot be created retroactively. You can’t decide that you’ve been providing care for five years, determine what that was worth, and create an agreement after the fact. If you and your loved one wish to enter this type of arrangement, create your caregiver agreement beforehand.
A correctly constructed caregiver agreement is a good way to compensate caregivers that are providing needed care, and still allow the care recipient to retain eligibility for Medicaid.
Everyone’s circumstances are different, and there’s no one clear path to follow. Working with an experienced estate planning attorney who focuses in Medicaid planning will help you understand your options, navigate the complexities, and provide the best possible care for your loved one.
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