Care Agreements Are a Good Idea

Ensuring everyone expects the same outcomes is a good idea whenever you ask someone to work for you. Assuming everyone interprets comments the same can lead to big misunderstandings. Therefore, writing up a care agreement is a good idea if you hire someone to care for a family member, especially a relative. It clearly defines expectations between the one asking for help and the one providing it. Though not as formal, a care agreement follows the pattern of a workplace job description and, in many ways, functions like one.

In addition to clarifying job expectations, care agreements serve another important function. If you plan to apply for Medicaid, it shows you didn’t try to give away lots of money to become eligible. When reviewing an application, Medicaid always wants to know why large sums of money are leaving someone’s account. They want to ensure that the individual hasn’t tried to “beat the system” by giving large lump sums to friends or relatives to keep for them until they get approved. A well-written care agreement clearly shows service payments.  

What does a well-written care agreement look like? There are many styles, but all have essentially the same content. Therefore, I’ll review what you need, and you can create the design however you like.

First, there are two different types of job duties to consider when creating the agreement.  One is called “activities of daily living-ADL” because it refers to all those daily tasks to care for ourselves. They are essential for our general health and well-being and apply to everyone.

The other type is called “Instrumental activities – IA.” Think of instrumental activities as those that support you in maintaining your lifestyle and helping you stay comfortable and satisfied with life as you know it.

Below are some examples of both types of activities. Consider including both activities in the duties to be performed when creating the care agreement.

What to Include in an Agreement

When writing the care agreement, it might help to have an outline, so you don’t forget any topics you want to include.

1. Start Date / Length of Agreement

Include the date the care agreement begins and, if the job is temporary, the date it ends. The date must be current or future; you cannot backdate the care agreement. Suppose the agreement will continue indefinitely until one of the parties chooses to terminate it. In that case, you can state, “Agreement remains in effect until either party notifies the other of their decision to terminate the agreement in writing. Both parties should provide the other with two weeks advance notice except for violations of this agreement, unethical or unsafe behavior, or an emergency when immediate termination of the agreement may occur.”

2. Pay Rate and Frequency of Payment

The care agreement must include the caregiver’s rate of pay. In most cases, it will be an hourly rate with overtime eligibility for all hours worked over forty in a work week.

Registered Nurses may be paid a salary (i.e., a lump sum amount per week and no overtime) based on Wage and Hour rules from the Department of Labor. However, many employers pay them hourly and give them overtime as a goodwill gesture for their hard work.  LPN, Care Partners, CNAs, Paramedics, and all other hands-on caregivers are paid hourly.  

In your care agreement, include the hourly and overtime rates of pay, when the work week starts and stops, and how they are paid.

Note: If you plan to provide benefits such as sickness or vacation time, include a reference to those details after discussing the pay rate.

3. Job Functions Vs. Tasks

Make a list of the types of job functions needed but don’t try to list all the tasks required. Lists create confusion if something is left off the list. If you use broad terminology, you don’t have to worry about forgetting to list a specific task. Therefore, rather than listing tasks like this:

Performs vacuuming, dusting, scrubs, bathroom tub fixtures, toilet cleaning, washing dishes, etc.

Use broader terms like this:

Completes light housekeeping to include all rooms except the Main bathroom and bedroom, cleans all surfaces and fixtures in bathroom and kitchen, including floors, baseboards, etc.  

4. Signatures

Both parties, the one hiring and the one being hired, must sign the care agreement. In addition, some states require signatures to be notarized. (Virginia does not)

5. Common Mistakes

When it comes to creating a formal care agreement and paying a caregiver, even a small mistake can cause a denial of long-term care Medicaid coverage. Try to avoid the following common mistakes:

• Paying a caregiver retroactively. Care agreements establish a contract for future services; therefore, they cannot apply to services previously provided.
• No record of hours worked to match payments made. Medicaid may audit payments to confirm that money collected by the “caregiver” was for services provided and not a “gift” to help the Medicaid applicant spend down assets.
• The rate of pay is too high. If the caregiver’s pay is higher than the going rate for the type of care provided, it can be considered a gift for Medicaid purposes.
• Being unaware of the rules in the State in which one resides. For instance, some states require that the signed agreement be notarized, and others do not allow for a lump sum payment for services.

Sample Agreement

Effective October 1, 2020, Donna Steigleder (hereinafter referred to as “Donna”) will provide caregiver services to her brother, Bobby Carter (hereinafter referred to as “Bobby”), at his home located at 1010 Rogers Rd., South Hill, VA, 23748. This care agreement will stay in effect until such a time that either Donna or Bobby chooses to terminate the agreement in writing or if either party believes the terms of the agreement have been violated. (Terms would be violated for failure to provide services or payments as stated, unethical or unsafe acts, or due to an emergency.)

The work hours are Monday through Friday, 9:00 a.m. through 4:00 p.m., averaging 35 hours per week. However, the number of work hours, work start and stop times may be changed by mutual agreement.

The workweek starts Sunday at midnight and ends Saturday at 11:59 p.m. All hours worked during that time frame are totaled for the week and paid the following week on Tuesday. Pay is through direct deposit.

Donna’s hourly rate of pay is $15/hour. If she works more than 40 hours a week, she is eligible for overtime pay at an additional ½ the rate of her hourly wage or $22.50/hr.   She is not eligible for benefits. Federal, State, and required withholding taxes are deducted from her checks as required by law.

Donna’s job responsibilities include assisting with the following:

• Activities of daily living include but not be limited to eating, bathing, dressing, etc.
• Movement in all forms, including but not limited to changes in position, moves from bed to chair, chair to the vehicle, etc., or transportation away from home.
• Participation in diversional entertainment and activities.
• Monitoring health and reporting concerns related to findings promptly.
• Monitoring the environment for potential safety concerns and taking appropriate corrective action.
• Maintaining a comfortable, pleasant, and respectful environment regarding communication and personal interactions between Donna and others related to actions within her control.

Either party may terminate this Agreement immediately with or without notice; however, if possible, a two-week notice is requested to allow for time to obtain a replacement if Donna should decide to leave voluntarily. 

https://www.caring.com/caregivers/family-caregivers/

https://www.caring.com/caregivers/medicaid

https://www.medicaidplanningassistance.org/personal-care-agreements/