Each year, countless American households encounter a challenging dilemma: how to handle the situation when a family member needs care but lacks the financial means to afford private facilities, or a private family caregiver, yet have too many assets to qualify for Medicaid's long-term care assistance. In such circumstances, many rely on their relatives for support in caregiving, even without any formal family caregiver training.

Approximately 34 million Americans act as unpaid family caregivers, and based on a 2021 AARP survey, they spend an average of 26% of their yearly income on costs associated with caregiving. In the state of Florida, Medicaid does not cover long-term care expenses for individuals with assets exceeding $2,000.

In order to become eligible for Medicaid long-term care support, many families will look towards a Medicaid spend down, where people spend down their assets until they hit the eligibility threshold for Medicaid long-term care coverage. Many aging individuals would hope to gift these assets to family members, however that’s unfortunately not possible without at least five years of advanced planning.

As AARP explains, “When determining Medicaid eligibility, states are required by federal law to ascertain whether an applicant transferred assets for less than fair-market value during the 60 previous months, and for California, 30 months.” This is known as the look-back period, and prevents aging individuals from transferring assets to relatives once the need for long-term care becomes apparent. Instead, money should be used for healthcare and living expenses until the person has little enough money to qualify for Medicaid.

Please see Aidaly’s guide to the Medicaid five year lookback period and to spending down assets for Medicaid for more details.

How do Personalized Service Agreements Work for Family Caregivers?

Fortunately, in Florida another solution exists. In Florida, people can use personal services agreements to pay their family members for taking care of them. This allows them to give money to their loved ones while still following the rules of Medicaid.

Medicaid says that people have to spend their money on care before they can get help from Medicaid. A personal services agreement is a contract between the person getting care and the caregiver. Usually, the caregiver is a child, but it can also be another family member. This agreement helps people qualify for Medicaid because the payments are not considered gifts.

According to the American Council on Aging, “A personal care agreement legitimizes the reason payments are being made to the individual, or stated differently, offers proof that money is being paid by the Medicaid applicant for receipt of care services.” 

The contract “clarifies the relationship between the caregiver and care recipient, establishes clear expectations as to what services are to be provided (i.e., personal care assistance, transportation to physician appointments, and housekeeping), states when and where care will be received, and includes the care recipient’s rate of pay and frequency of payment. Essentially, personal care agreements protect all parties involved,” as the American Council on Aging continues.

Once a personal services agreement is executed, caregivers become legally obligated to provide care to their care recipient.

Getting Paid as a Family Caregiver With Personal Services Contracts 

In exchange for their care services, the person receiving care agrees to pay the caregiver a set amount, like a work contract..

AARP explains: “The money may be made in periodic or installment payments or in a bulk/lump sum payment. The contract can also act as an IOU for future payments. How the payments can be made will depend on what your state’s laws allow. Do not attempt to make retroactive payments — the contract cannot cover services the caregiver provided in the past.”

The compensation must be for a reasonable, market-rate amount, equivalent to the level of care provided. We recommend looking at your city’s median salary for homemaker services, which most commonly represents the duties – such as cooking and driving to appointments – performed by a family caregiver. In Miami, the 2021 medium hourly rate of homemaker services was $22, according to Genworth’s cost of care survey. This will count as taxable income for the caregiver.

If an advanced, bulk payment is made, it has to be calculated based on the care recipient’s estimated life expectancy and the level of care the caregiver will provide until then. Make sure the contract for Medicaid long-term care is legally correct and ensure that the fee paid to the caregiver is reasonable. Medicaid will then review the documents.

We suggest working with a lawyer who specializes in eldercare in your state to make sure you follow the correct procedures.

Aidaly Pays Family Caregivers

Many aging individuals do not have sufficient funds to pay their family caregivers via a personal services contract; rather, they need their assets and income to cover their living and healthcare expenses. Aidaly solves this problem, and helps family caregivers get paid for the work they already do. If you are a family caregiver and would like to explore getting paid for your work, please apply today. Qualifying for benefits is easy – you just need to provide us with some basic information and we’ll take care of the rest!

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