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Medicaid: How To Plan Ahead For Long Term Care Coverage

Fund A Caregiving Agreement With Family Members or Friends

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If you need immediate care, an alternative for reducing the amount of your assets to qualify for Medicaid without penalty is to enter into an agreement with an adult relative or friend  for caregiving services.

The contract must at least include:

  • A description of the services to be provided, such as transportation to medical appointments.
  • The compensation.
  • The length of time of the contract.
  • The contract cannot provide payment for past services.

If the agreement is properly documented, payments under the contract are considered to be wages - not gifts. The person receiving the money must pay taxes on the income. When calculating your taxes, you may be able to deduct the cost as a medical deduction.

If the person is considered to be an employee instead of an independent contractor, you may have taxes to pay, forms to fill out and records to keep.

It is advisable for a lawyer familiar with the Medicaid laws in your state to draft the agreement - or at least to review it before signing.

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More Information

Caregiver Agreement

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