By Attorney Jessica Fisher Greene
Paying a caregiver for care may create significant problems if not done correctly. These problems include, but are not limited to, negatively impacting eligibility for Medicaid benefits; income tax issues; and personal liability issues. If an individual receiving care pays a person for providing that care, the least problematic way to engage a care provider would be to hire an agency that has its own employees. Those employees would then be covered under their employer and not create a sub-contractor relationship causing liability issues with the individual personally. If you decide that you want to pay an individual for care and not an agency, a contract must be created in order to avoid negatively impacting eligibility for Medicaid benefits. The contract requires certain provisions in order for it to be valid for Medicaid purposes. If the contract is not set up properly and payments are made within 5 years of applying for Medicaid, then these payments may look like transfers for less than fair market value (gifts) and could make the individual receiving care ineligible for Medicaid benefits in the future. Payments made to the caregivers must be declared as income on their personal income tax returns. Depending on how much money is earned and the services being provided, the caregiver’s eligibility for Social Security Disability Income could be negatively effected.
An individual receiving care may transfer their residence to their caregiver if their caregiver is their child, who lived in the residence for at least two years immediately before the individual became institutionalized, and who provided care that allowed the individual to live at home rather than in an institution or facility. The child caregiver must have lived in the parent’s residence and be able to prove that through tax, employment, postal, or other records. In addition, a doctor must provide verification of the care via a written statement that declares that the care provided by the individual’s child over the two years allowed the individual to live at home rather than in a long-term care facility.
There are ways to plan to protect family wealth and compensate caregivers. Feel free to contact our office for more information.
Jessica F. Greene, CELA,* LL.M. in Elder Law
*Certified as an Elder Law Attorney by the National Elder Law Foundation as authorized by the Pennsylvania Supreme Court
