03 Jun COURT RULES CAREGIVER DAUGHTER COMPENSATION RESULTS IN MEDICAID TRANSFER PENALTY
Under federal long-term care Medicaid laws, there is a presumption of “guilt” if there is an uncompensated transfer within five (5) years of an application for long-term Medicaid (which helps pay for institutional care, drugs, etc.) since long-term care is “means-tested” In other words, the government has an anti-fraud statute to discourage potential applicants from purposefully reducing their resources so that the government would help pay for the applicant’s long-term care (i.e., nursing home, medicines, etc.). In Texas, the countable resource limit for a person who is single is only $2,000 (generally excluding homestead, one car, pre-need funeral, personal property, some retirement accounts, etc.). Thus, it is common to plan to get much needed governmental benefits.
In this case, the daughter quit her job to take care of her mother at daughter’s home. There was no written agreement. The daughter looked at Craigslist to determine how much she was to be paid based on similar services. When the mother went into a nursing home and applied for Medicaid, a transfer penalty was assessed based on the amount she paid her daughter. On appeal, the court agreed with the state (New Jersey) Medicaid agency as a result of many reasons including payments when it was obvious that care would be needed in the near future. If the payments had been a professional instead of daughter, the results would likely would have been different.
It is anticipated that the same results would have been reached in Texas. However, it should be noted that many states allow caregiver agreements (even to a child).
In Texas, an elder law or elder care attorney would have likely suggested that the mother and daughter should have determined the fair market value for mother’s lease of a room in addition to the use of common elements (probably through a realtor) in the daughter’s home in addition to the mother paying her fair share of utilities, groceries, etc. which would be agreed upon by lease. Proof of the fair market value of the rent in addition to the lease payments would then be provided to the state when the mother applies for Medicaid. This would accomplish the spenddown within the Texas rules as payment of the fair market value for rent is acceptable unlike payment to a child for caregiver services (which is presumed to be an uncompensated transfer).
If interested in learning more, consider attending our next free “Estate Planning Essentials” Workshop on Saturday, June 15, 2019 from 10:00 a.m. to 11:00 a.m. by calling us at (214) 720-0102 or signing up online at www.dallaselderlawyer.comor by clicking here.