Always Put Caregiver Contracts in Writing

When hiring a caregiver- it is important to put the contract in writing. Courts can be especially strict about requiring contracts when caregivers are relatives- but a formal agreement is still necessary even if the caregiver is not a relative.  A recent Michigan court ruling illustrates how failing to document an agreement with a non-relative caregiver can affect Medicaid benefits.

Jason Jensen hired a caregiver for his grandmother- Betty Jensen- who suffered from dementia. Mr. Jensen and the caregiver had an informal agreement and no contract was signed- but Mr. Jensen paid the caregiver a total of $19-000 from Ms. Jensen’s assets over the course of the months she worked for Ms. Jensen.

When Ms. Jensen’s condition worsened- she entered a nursing home and applied for Medicaid. Because there was no written contract in place- the state considered the payments to the caregiver to be transfers that were made for less than fair market value. Due to the transfers– the state established a penalty period before Ms. Jensen could qualify for Medicaid. Ms. Jensen died before the penalty period ended.

Mr. Jensen appealed the state’s decision to court- and the trial court decided in his favor- ruling that the state Medicaid regulation requiring that a caregiver contract be in writing applied only to relative caregivers. The state appealed this ruling.

The Michigan Court of Appeals reversed the trial court’s decision- stating that it was bound by the regulations- which require that caregiver contracts be in writing- even for a non-relative. According to the court- because there was no written contract- the payments to the caregiver were unlawful. For more information read the Michigan Court of Appeals’ decision.

If you are hiring a caregiver- even for a few hours a week- it is important to draw up a formal agreement- especially if you think you will ever apply for Medicaid long-term care benefits. To get help drafting an agreement- contact your attorney.