August 26, 2016
A Care Agreement Contract is basically a contract with one person, often an adult child, agreeing to provide care services to a parent or disabled person in need of care services. Care agreement contracts are commonly referred to as Personal Care Agreements or Care Giver Contracts. In recent years, care agreement contracts have become an important part of long term care nursing home Medicaid (Medical Assistance) planning in Wisconsin.
A properly drafted Care Agreement Contract sets forth the expectations of the care provider and the care receiver. The agreement names the care provider and clarifies the duties and services to be provided, payment amounts, schedule and location of care, and other matters of care. It can also cover matters like room and board.
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Why Might I Need a Care Agreement Contract?
There are two main reasons to implement a care agreement contract. The first reason is to avoid misunderstandings and conflict within the family about the arrangements between the care giver and care recipient. The second reason is to ensure compliance with Wisconsin laws.
If a relative is paid for providing care in Wisconsin, a Care Agreement is needed to avoid running afoul of the Wisconsin long term care nursing home Medicaid laws. A properly executed and planned Care Agreement Contract, can result in payments to the child or relative being considered payment for services – and not a gift for Medicaid purposes. Non-allowed gifts will result in nursing home penalties.
Provide Compassionate Care to a Family Member
The goal of a care agreement contract is to provide overall care or care in addition to what the disabled or elderly person is already receiving. At Wokwicz Law Offices, our estate planning lawyers have prepared Care Agreement Contracts for many clients. Below are three typical use cases:
- An elderly father who lives with his adult son. The son provides full-time care for his father.
- An elderly couple who lives with their adult daughter. The daughter provides care above and beyond what the couple receives from a professional services company.
- An elderly and disabled mother whose children rotate taking care of their mother on a part time basis, in addition to professional services that the mother receives through Medicaid.
In every contract that we prepared, we always work to make sure that the care recipient is well taken care of, while enabling the care provider to be compensated for his or her work.
Importance of a Care Agreement Contract in Wisconsin
Where a relative is providing the care service in Wisconsin, a properly written and notarized Care Agreement Contracts is especially important. Failure to have a properly drafted and duly notarized care agreement before providing services, can result in the payment from a parent to a relative being treated as a gift instead of treated as a payment for services. If the care payment is treated as a gift, any such payments within five years of applying for Medicaid, may result in a penalty period during which time the government will not pay for nursing home costs.
A Care Agreement Contract needs to set forth a rate and schedule of payment for work. That payment cannot be more than the “reasonable compensation” for the services provided. Clarity about rates and schedules helps avoid family arguments and misunderstandings.
Failure to address the “reasonable compensation” issue can lead to payments for care being treated as gifts for Medicaid. The overpayments become a gift in the eyes of Medicaid regulators, resulting in fees and penalties.
Items Addressed in a Care Agreement Contract
The following are the type of items that we generally discuss when meeting with clients about Care Agreement Contracts. This is not an exhaustive list – it is just a highlight of some of the more common considerations. When preparing an agreement for our clients, we address and set forth a fully comprehensive list.
Care Giver Duties
We address a full range of care giver duties, including: driving, shopping, personal care services, meal preparation, cleaning, hygiene, medication monitoring and help, doctor appointments, arranging for needed services, and more.
Schedule of Care
We set out the hours and days that the care provider will provide services. We detail where the services will be provided.
Coordination with Outside Service Providers
We document whether the care giver will be the sole provider of services, or it other agencies or persons will also provide services. We address vacations and respite arrangements, to ensure the care provider has adequate time off.
Rate of Pay
We formalize pay arrangements in keeping with professional industry norms to avoid family conflict and Medicaid penalties.
Taxes on Payments
We explore whether taxes will be due on payments for care, establishing whether the care recipient will be considered an employer. We determine if the care provider will be considered an independent contractor.
Length of the Contract and Conditions for Termination
Like any contract, a care agreement contract must detail how long the agreement is to be in effect. It should also set forth the circumstances for which it can be cancelled or rendered null and void.
Room and Board
Where the care recipient lives with the child providing care, the agreement should include a room and board provision. Room and board can also be covered in a separate agreement.
Our Experience with Care Agreement Contracts
We have helped thousands of clients navigate the estate planning and nursing home long term care Medicaid process. Our lawyers can prepare a properly drafted and executed Care Agreement Contract for you and your loved ones. Contact us today to get started.