Caregivers: Can You Get Paid to Care? Watch Out
I get clients asking me regularly if there is any way they can be paid by their loved ones to provide care in the home. The answer is, as typical with Medicaid matters, a little complicated. You CAN get paid – but you can also make grave mistakes handling the matter and incur large gift penalties when you apply for Medicaid benefits in New Jersey. A prime example of the latter is a case called E.A. v. Division of Medical Assistance and Health Services, a case decided on July 20, 2015 in New Jersey. You can get the text of the decision here.
The applicant here had a daughter serving as a caregiver. They executed a series of agreements whereby the applicant was to make regular monthly payments to her daughter in exchange for room, board, and caregiving. Those numbers were based on the cost of nursing home care, or the cost of a licensed and bonded home health aide company. When the applicant ran out of money and applied for Medicaid, the county denied the application because it deemed those payments to be a gift. [WARNING: Legal jargon ahead]
An individual who wants nursing home Medicaid services shall be deemed ineligible for those services if the individual “has disposed of assets at less than fair market value at any time during or after the [sixty-]month period immediately before . . . the date the individual applies for Medicaid as an institutionalized individual” (the look-back period). N.J.A.C. 10:71-4.10(a)(2), unless the applicant presents “convincing evidence that the assets were transferred exclusively (that is, solely) for some other purpose.” N.J.A.C. 10:71-4.10(j). “In determining whether or not an asset was transferred for fair-market value, only tangible compensation, with intrinsic value shall be considered.” N.J.A.C. 10:71-4.10(b)(6)(i). A transfer for “love and affection” is not considered a transfer for fair market value. Ibid. “In regard to transfers intended to compensate a friend or relative for care or services provided in the past, care and services provided for free at the time they were delivered shall be presumed to have been intended to be delivered without compensation.” N.J.A.C. 10:71-4.10(b)(6)(ii). “Thus, a transfer of assets to a friend or relative for the alleged purpose of compensating for care or services provided free in the past shall be presumed to have been transferred for no compensation.” Ibid. The applicant may rebut the presumption by the presentation of credible documentary evidence preexisting the delivery of the care or services indicating the type and terms of compensation. Further, the amount of compensation or the fair market value of the transferred asset shall not be greater than the prevailing rates for similar care or services in the community. That portion of compensation in excess of the prevailing rate shall be considered to be uncompensated value.
The caregiver here made a couple mistakes. The caregiver did not abide by the agreements, and instead took amounts of money that did not coincide with the contract amounts. The caregiver also benchmarked their payments against services that weren’t comparable – you can’t compare your caregiving at home to that of a full-time licensed facility, or even to a company with licensed and bonded caregivers. Finally, the amounts in question here were fairly large, and caused almost a three-year penalty period. If you are going to try something like this, it has to be done very precisely with good paperwork, good followthrough, and solid research backing the claims. Almost all of the clients requesting this kind of service reconsider once I tell them what they will need to do to make it work at the application stage. However, it is possible, and especially if you have a parent who wants to stay home for a long time, this can be a good option to pursue.
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