Goldberg Law Group recommends family members enter into a care agreement with the loved one they are helping. Even though it may be uncomfortable to enter into a contract with your parent (“we’re family!”), we counsel clients that if the parent is reimbursing the child for their time and effort that the agreement be memorialized. One of the main reasons we enter into care agreements is because when reviewing an application for Medicaid, the Division of Medical Assistance and Health Services (“DMAHS”) requires that all transfers be documented. Otherwise, the transfer is presumed to be a gift for the purpose of qualifying the applicant for Medicaid earlier than she otherwise would have been. Any transfer that cannot be adequately rebutted is assigned a transfer penalty. A recent New Jersey Superior Court case decision emphasizes that even care agreements aren’t enough:
In E.A. v. Division of Medical Assistance and Health Services, a New Jersey appeals court ruled that the state properly disregarded a Medicaid applicant’s care agreement and assessed a transfer penalty because the rate charged under the agreement was too high and the applicant did not provide enough details about the services provided in order to calculate their value. E.A. v. Division of Medical Assistance and Health Services (N.J. Super. Ct., App. Div., No. A-2669-13T3, July 20, 2015).
In 2006, E.A. and her daughter, B.C., entered into a care agreement in which E.A. agreed to pay B.C. a monthly fee for care. The fee was based on the amount charged by a private home care agency. B.C. occasionally made larger withdrawals than the contract called for and did not keep records of the services provided. In 2012, E.A. entered a nursing home and applied for Medicaid. The state refused to acknowledge the care agreement and found that B.C. had transferred a total of $244,510 to B.C. and imposed a 936-day penalty period.
According to the court, B.C. and E.A. did not abide by the agreement when B.C. made additional withdrawals, and B.C. was not entitled to the rate charged by the private home health agency because she did not provide the same full-time services as the agency. In addition, the court ruled that E.A. did not provide enough details of the types of services actually provided under the care agreement for the state to calculate the value of her services.
If you decide not to use a home health agency and wish to care for your parent on your own:
1. Charge a fee below the fair market value rate of local private home care agencies.
2. Specifically state all duties and obligations in the care agreement.
3. Document all services in a daily log.
4. Don’t take more money than is called for under the care agreement.