Are you caring for an elderly family member or friend and not getting paid? You may be thinking that it is in the best interest of your loved one to preserve their assets rather than for you to get paid for the care you are providing. And in some cases, that is correct. In other situations, however, having a loved one pay you for their care can actually benefit you and your loved one.

Keep in mind that if things reach a point where nursing home placement is the only option, for a single person, all of their money will be considered available to pay for the cost of their nursing care. They will not be eligible for Medicaid assistance until all of their assets have been spent down to $2,000 in Kansas or $5,909.25 in Missouri.

With a proper care contract in place, however, an individual can pay their caregiver and every penny spent will count towards their “Medicaid spend down” once they apply for benefits.

It is extremely important to have a care contract which complies with the State’s Medicaid laws. Otherwise the payments made to an individual without a care contract will be considered a “gift” or a “transfer of assets” for Medicaid eligibility purposes and the State will impose penalties which can result in ineligibility.

Both Kansas and Missouri have specific requirements for personal care contracts. Generally speaking, both states require a written agreement, signed and dated on or before the date the services are to begin, specifying the services that are to be provided and the rates that are to be paid (which must be fair market value).

Over time, not only can a substantial amount of assets be protected if you have been caring for your parent, but your parent may even want to transfer their home to you. If you are a child who has been providing twenty-four-hour care for your parent in your parent’s home for two or more years, there is a Medicaid planning technique that may be available which would allow your parent to transfer their home to you without incurring Medicaid penalties. This is not true in all cases, but if you and your parent meet certain criteria, the exemption known as the “Caretaker Child Exemption” could be a great way to ensure your parent’s home stays in the family.

To be eligible for this exemption, the two years of caregiving that were provided must have prevented your parent from needing to move into an assisted living facility or nursing home. In other words, had you not been providing care, your parent would not have been able to live in his or her home alone. Other criteria include, but are not limited to, you must be a biological child, and you must still be living in the home at the time of the transfer. Once the house is transferred, it will no longer be subject to estate recovery. ** Qualifying for this exemption has its pros and cons so please seek legal advice before your parent gifts their home.