Authored by: Anisha D. Rutkowski
Does your loved one need a Caretaker Agreement now to protect future Medicaid needs?
Do you have a spouse or a parent who receives in-home care or care for their home provided by you or a hired individual? Changes in Michigan law over the last few years may impact how payment for these services will implicate Medicaid eligibility. Essentially all payments to these service providers are at risk of being classified as “divestments” pursuant to Michigan Medicaid policy, unless a contract is in place that meets specific state-mandated requirements.
First, what is a “divestment” when it comes to Medicaid? A divestment is a transfer that is considered as made for less than fair market value and will result in a penalty period in which Medicaid will not cover costs for care. Consider a situation where your aging father requires assistance at home, and you hire an individual to help him out around the house. It is important to realize that any payments made to that individual, within a time frame of 5 years before your father eventually enters a nursing home or needs long-term care Medicaid benefits, may be considered a divestment. This means that Medicaid coverage will not apply during an assessed penalty period because of this divestment.
You may be wondering how you can possibly predict when your parent or spouse is 5 years away from needing such long-term care and Medicaid coverage. Because it is not easy to anticipate when these needs will arise, it has become increasingly important under Medicaid policy to take the proper precautions to avoid divestments occurring from home and care services. The best way to do so is to make sure that a Medicaid-compliant Caretaker Agreement is in place for any personal care or home services a loved one receives. These Agreements will be scrutinized by the State of Michigan and must show compliance in various areas in order to avoid the divestment classification. The timing of the services in relation to the contract signing, the input of a physician, specific information about the nature of the services, and the compensation paid to the provider are just a few of the matters that the Agreement must address.
Keep in mind that these policies also apply in circumstances where relatives are providing the needed services, and the fees charged must be in line with the fair market value of such services in the surrounding area. If you have questions about using a Medicaid-compliant Caretaker Agreement to avoid divestments, please contact our office today.
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