Over 22 million Americans care for their ailing parents, other relatives or friends. Most of these caregivers do so without compensation. Taking certain steps ahead of time may save assets from Medicaid.
If caregiving services are being provided by a child, but no caregiver contract is in place, the family risks losing assets. In the absence of a written contract, Medicaid considers the caregiving services of a child are provided free. If the parent is facing a nursing home stay, and transfers $100,000 in the bank to his child for services actually provided, Medicaid considers the transfer a gift and it causes a period of ineligibility from Medicaid.
A proper caregiver contract that compensates the child for providing the care can save assets without resulting in a period of ineligibility from Medicaid. The agreement should be written as soon as possible, the compensation should be reasonable, and you must comply with the contractual arrangement including paying appropriate taxes.
The parent’s home may be transferred to a child who has resided in the home for at least two years before the parent became institutionalized and who provided care to the parent which permitted the parent to reside at home rather than a facility. It is the state that determines whether the care kept the parent out of a facility.
If a family plans to use this exception to the transfer rules, there are important steps to take ahead of time to help ensure that the state applies the exception. An elder law attorney can assist you.
This information is for general informational purposes only and does not constitute legal advice. For specific questions, you should consult a qualified attorney.