What is a Care Agreement?
A care agreement is a written document that spells out what the caregiver and the family member agree will be the caregiver’s job duties. Furthermore, the Agreement includes expectations about job duties, including services, assistance needs, etc. For example, the scope of care may include only activities of daily living such as feeding, taking to the bathroom, helping to walk, etc. (see below), or it may also include instrumental activities such as helping with transportation, using the phone, taking medicines, doing housework, etc., (see below). Generally, a care agreement speaks to the following:
- Date care starts (and if it’s for a specified time frame, include the expected end date)
- What tasks to perform – try to be somewhat specific but use terms broad in scope to cover group tasks (you can say vacuums all rooms rather than list each room, for instance), and add “or similar tasks to be mutually agreed upon; by the parties.”
- Hours of work (schedule and hours of availability)
- Rate and frequency of pay
- State that the Agreement is final unless both parties agree to future changes. Both parties must agree to any future changes and document the change in writing.
Examples of the Types of Tasks
Activities of Daily Living
Feeding, toileting, picking out what to wear, dressing, grooming, maintaining continence, bathing, walking, transferring, cleaning eyeglasses or helping with contacts, and oral hygiene.
Managing finances, handling transportation, shopping, preparing meals, using telephone and other communication devices, managing medications, housework, and essential home maintenance.
How do Care Agreements Work?
Care agreements formally establish a business relationship between the person receiving the care (employer/family member) and the caregiver (employee). Based on the Agreement’s written terms and conditions, the caregiver receives pay for providing care services.
Care agreements serve multiple purposes. First, the Agreement documents an honest working relationship by clearly establishing expectations between the employer and employee regarding pay and work. Too often, assumptions are made with verbal agreements, leading to misunderstandings and resulting in conflicts.
If you plan to apply for Medicaid at some point, they may audit your financial records. One of the areas they check is to see if you have tried to give away money to relatives or others to become Medicaid eligible during the five years before you apply. A way people do that is to pay caregivers a very high salary. Doing so reduces the family member’s assets. Therefore, be careful what you pay the caregiver. Don’t pay an excessively high wage. The pay rate cannot be higher than the going rate others pay in the area.
Otherwise, you can pay weekly, every other week, or pay one large sum at a particular time, whatever works best for you and the caregiver. However, whichever method you choose, the payment cannot be for work performed before the care agreement goes into effect.
Paying a lump sum payment is probably the least favorable payment method as far as Medicaid is concerned. In addition, lump-sum payments can be a red flag to the government that you are trying to get around Medicaid rules for meeting their eligibility requirements. Therefore, be careful how you calculate the caregiver’s pay and keep records that show hours worked and pay received. Again, I strongly recommend you consult a Medicaid specialist to help you determine how is the best way to do this calculation correctly.
Who Uses a Care Agreement?
The most common personal care agreements are between an aging parent and adult children. However, these contracts are also created for grandchildren caring for grandparents, nieces, nephews caring for aunts and uncles, and siblings caring for siblings. While this type of contract is generally between two family members, the caregiver does not have to be related to the care recipient. Rather, the care recipient could be a close friend or a private caregiver.
Using a personal care agreement between spouses as a “spend down” method for excess assets is ineffective. The reason why is because Medicaid considers all married couple’s assets as jointly owned.
What to Include in an Agreement
Care agreements should include the following information:
Job Functions Vs. Tasks
Make a list of the types of job functions needed but don’t try to list all the tasks required.
Why would I recommend not listing all the job duties? Shouldn’t you tell someone everything they need to do? If you try to list each task, you’ll forget something. Then, if it’s not on the list, the caregiver may question if they are to do it. Instead, use terms that describe functions rather than tasks to prevent confusion regarding whether tasks can be added or deleted as the job changes over time.
When you’re writing the job description section, don’t write out the tasks in this manner:
Performs vacuuming, dusting, scrubs, bathroom tubs fixtures, cleaning the toilet, washing dishes, etc.
Instead, think in terms of grouped tasks. List the duties 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.
Pay Rate and Frequency of Payment
The contract must include the caregiver’s pay rate, hourly rate, overtime amount, how many hours they work per week and per day when they get paid, and how often. In addition, their pay rate must be in line with what others performing similar work in your area receive. You can find that out by doing a pay range search for that job title online.
Start Date / Length of Agreement
Include the date that care needs to begin and the anticipated end date in the Agreement. It must be a future date; you cannot backdate the contract. If you don’t know the end date say, “Agreement remains in effect until either party puts in writing a request to terminate the agreement.”
Modification / Termination Clause
Include a clause allowing modification of the personal care agreement when both parties agree to the changes. If the Agreement is long-term, I highly recommend reviewing the Agreement and modifying it as needed annually. I also recommend adding a clause that allows for the termination of the Agreement, preferably with notice or without notice for cause (if the caregiver violates certain behaviors such as abusing your family member or stealing something).
Both parties, the care recipient and the caregiver, must sign the personal care agreement. In addition, some states require notarization for validity purposes.
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. Below are common mistakes made (and should be avoided):
- Paying a caregiver retroactively. Remember, care agreements pay caregivers for care planning for the future not previously provided. That’s why the Agreement has a start date for future care services.
- The caregiver does not keep a daily log of services and payments received. However, sometimes this log is needed for Medicaid to prove that payments were made to the caregiver for care services rather than given as a gift.
- The rate of pay is not reasonable. However, if the 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 some states do not allow for a lump sum payment for services.
Is a Lawyer Needed?
No, it is unnecessary to hire an attorney to create a personal care agreement; however, it is a good idea in some situations. The advice and guidance of a professional Medicaid planner can be very helpful. Doing so is particularly true if the care recipient plans to apply for long-term care Medicaid. A Medicaid applicant may violate Medicaid’s look-back rule by incorrectly drafting a personal care agreement. If so, Medicaid may penalize the applicant with an ineligibility period. Medicaid experts know the specific rules regarding personal care agreements in the State where one resides and can help ensure the contract is Medicaid compliant. For persons who plan to make a lump sum payment, it becomes even more important to consult a professional for guidance due to the higher risk of the payment looking like a gift, hence violating Medicaid’s look-back rule.
Date of Hire
Effective October 1, 2020, and until either party chooses to stop this Agreement, Donna Steigleder will provide personal care services to her brother, Bobby, at his home located at # road name, City, State, Zip.
Hours of Work
While Donna’s hours may be flexible based on Bobby’s care needs and her needs at home, her hours will be Monday through Friday from 9:00 a.m. through 4:00 p.m., as both parties agree. However, on most weeks, her total hours will average 35 hours.
Rate of Pay
Donna will be paid weekly on Monday for hours worked the previous Monday. Her workweek is Monday midnight through Sunday at 11:59 p.m. Her hourly rate of pay is $12/hour. She is not eligible for benefits but, as an hourly employee, is entitled to overtime pay at one-half her hourly rate of pay if she works over forty hours in a workweek. In addition, Federal, State, and required withholding taxes are deducted from her checks as required by law.
Donna’s job responsibilities include meeting Bobby’s comfort and personal hygiene needs throughout the day to include assistance with mobility, nutrition, transportation to appointments as needed, assistance with accessing diversional entertainment, monitoring his health, ensuring his safety, and reporting any concerns might surface to XXXX. Duties may be modified, added, or deleted upon notification and with the Agreement of both parties. Either party may also 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.