NJ Medicaid Planning Traps: Paying The Family For Caregiving

This article is particularly difficult to write. The people who most often get caught in this particular “trap” are trying to do the right thing for their family, and often need the money they're transferring simply to keep the lights on. If it's not done correctly, the consequences can be devastating – and even if it's done right, some careful advocacy is necessary to make sure the caseworker understands the situation. Caregivers often come in to the office asking if they can accept a wage or some lump-sum transfer from their loved one for being a caregiver. The answer is not often a welcome one.

Wages paid subsequently for care provided in the past is always going to be classified as an impermissible transfer. The regulations are quite clear that care provided without a written contract and without any payment made contemporaneously are provided “for love and affection,” or in other words, without cash payment. What we need to have happen is that instead of funds appearing as gifts or transfers, a relative is simply recognized as a caregiver. If your loved one needs immediate care, it is often possible to put together a “personal services agreement” or “caregiver agreement” or similar written document, in which the parent agrees to pay the son or daughter for caregiver services such as helping with household chores, driving to doctor appointments and otherwise coordinating or providing care. The drawback is that the caregiver and their loved one are both incurring extra expenses, such as insurance costs, payroll expenses, and income tax withholding. However, if there is enough care involved, it may be worth the extra red tape to avoid transfers under the lookback.

As your attorney, I am trained to make semantics and terminology work to your advantage. By deeming these transactions ‘wages’ rather than ‘gifts’, I can convince a caseworker that these are not impermissible transfers, and it may help your loved one stay at home while providing you with some money to take care of your daily needs. My office would be happy to assist you with a caregiver agreement handled prior to an application for New Jersey Medicaid under the Home and Community-Based Services Comprehensive Waiver or the Global Options Waiver programs. I would be happy to discuss this option as it also involves an elder’s ability to self-direct care, remain at home in the community and receive care from trusted family members.