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Thursday, February 25, 2016

What is a Care Agreement or Contract and Who Needs One?

Hundreds of people maybe even thousands today are caring for a senior in their home or even taking them into their own home to care for them. Most of the time this is a family member. When faced with caring for a loved one often times a person has to give up work or retire early in order to care for their needs. This may put a financial burden on the one providing the care. To help compensate them for the loss of income many family members chose to pay their caregiver either from their own income or savings or by using funds provided by government benefits. 

If this is the case for you or someone you know you should consider putting a care agreement or care contract into place. But what is a care contract?

"My mother always told me get it in writing! The older I get and the more I see in life I understand why that is good advice. "

Simply put it is a contract drawn up either by you or by a lawyer if you prefer, that states who will be providing the care, what care is to be given and the amount of compensation agreed upon for these services.  At this point you may say but I trust my daughter so I don't need anything in writing I will just give her money and all will be good. Well here are some things to consider.

  • A contract will eliminate any misunderstanding between parties regarding either what is to be done or how and when payment is to be made. 
  • If the person you are caring for is starting to show signs of dementia, a contract NOW is essential because once they are deemed mentally unable to sign things, you are stuck. A contract signed after a diagnosis of dementia may be called into question. 
  • If there are other family members especially ones who may inherit money after you pass, the care agreement will protect the caregiver from having to justify why mom was giving you money. Believe me this will be needed in many families. 
  • If the person receiving the care is not already on Medicaid, but may have to apply for it in the future when their assets run low, the care agreement will protect them from being ineligible . Money paid to a relative or friend that is not part of a care agreement may be considered a gift and gifting is not allowed up to 5 years prior to any Medicaid application.  They may think that you were trying to divest yourself of assets (cash) in order to meet the asset limit. If they consider this to be the case the person applying may be deemed ineligible for several years or the money may have to be paid back in order to qualify. With a care contract this will not be an issue.
  • If the person paying for care is receiving Veteran's benefits, they may be audited at anytime. If they have a care contract they do not have to worry about how the VA views the payments to relatives. 

Now that we have discussed some of the  reasons for a contract or agreement, how do you construct one?
The agreement does not have to be to complicated but there are some things that should be included. Here is what I suggest you include:

  • What type of care will be given, things such as dressing, bathing, meal preparation, grocery shopping, medication monitoring, doctors visits, and in the case of someone frail, monitoring. All these things and more can be included.
  • Next you want to spell out how much compensation is to be paid and to whom. If two or more people will serve as caregivers you could have a contract with each one. 
  • Identify when payment is to be made. Is it weekly, biweekly or monthly payments? 
  • Specify how long this contract is valid. You could say something like " this agreement is to stay in place until I pass away or until I can no longer be cared for at home" you get the idea. 
  • The contract should then be signed and dated and kept in a safe place with other important papers. If you want you can have it notarized but it is not necessary. However if you are having it notarized remember not to sign it until you are in front of the notary.   

My mother always told me get it in writing! The older I get and the more I see in life I understand why that is good advice. People take advantage of others far to often. People misunderstand each other far to often. Having things in writing protects both parties and take the stress out of the situation. So protect yourself and don't leave things to chance. Get it in writing, you won't be sorry.  

Until Next Time
Take Care
Ruth Anne



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