Mom is 85 years old and in the nursing home. She has $50,000 in her bank accounts. We want to create eligibility for Medicaid and she has a caregiver who is able and willing to assist her.  Mom’s life expectancy according to the Florida Department of Children and Families is 6.62 years.  If the caregiver is able to work ten (10) hours per week advocating for Mom, which we would deem reasonable under the circumstances, we could pay the caregiver $35/hour (or less).  With this calculation, we would be able to pay a caregiver around $120,484 for his or her expected services (10 hours/week x 52 weeks/year x $35/hour x 6.62 years = $120,484.00). Since Mom only has $50,000 in assets, we could legally pay the caregiver a $50,000 lump sum to create Medicaid eligiblity and reduce her assets to less than $2,000. In this example, this is all done with assistance and guidance from a good elder law attorney.

There are a few items to note in this example:

• It may be reasonable to pay a caregiver $35/hour in some, maybe not all cases, depending on the work the caregiver provides. The caregiver may be acting in more than just a caregiver role. For instance, the caregiver may provide physical service (checking in on the patient/elder, helping with hygiene issues) while also may provide some things that are closer to a guardianship role (such as bill paying and other legal responsibilities). So we may be able to justify a higher hourly rate in some circumstances, which is very important
• Personal services contract are very exact and would only be done under certain circumstances with attorney consultation
• The caregiver will have income tax issues in getting a lump-sum payment
• The caregiver may need to get consent from Mom’s family/other children as this may disrupt Mom’s estate plan
• The Personal Services Contract, and all spend down, is documented to the Department of Children and Families, so this is all disclosed to Medicaid as part of the application process
• The Department of Children and Families reviews the contract, pay rate and the hours as a part of the Medicaid application
• Each situation is different so an elder law attorney will review all options for correct Medicaid “spend down” planning

We typically look to personal services contracts as a part of spend down planning for single people. Medicaid rules are different between a married couple and a single person, so there may be other (i.e., better) legal ways to protect assets for a married couple.

Explain This Again?

The use of a personal services contract is most likely used in “crisis Medicaid planning,” where the elder is already in a nursing home or the elder needs imminent long-term care Medicaid (such as in-home or assisted living Medicaid). In the above example, Mom is in the nursing home and will be private paying for care when her Medicare/health insurance ends (if she had a 3 day qualifying hospital stay before going to rehabilitation).  Mom has money that would otherwise disappear to the cost of long-term care as the nursing home costs over $10,000/month on private pay. Since her money will be spent very quickly without Medicaid paying for long-term care, the family will want to discuss how to best spend Mom’s money to get Medicaid qualification (for Medicaid to pay for her care faster). The personal services contract will help legally spend her funds down to less than $2,000, so she will qualify for Medicaid sooner with an elder law attorney’s assistance.

Read more related articles here:

Personal Service Contracts. Medicaidplanning.org

37.104 Personal services contracts.

Also, read one of our previous Blogs at:

Personal Care Agreements

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