In general terms, Medicaid expects that a person who provides care for a relative does so for love and affection, and without the expectation of pay, either at the time of service or in the future.
This presumption can be overcome where there is a clear understanding and intent that payment will be provided for care.
In some circumstances, this presumption can even be overcome without a written employment or care contract. These circumstances are rare, however, and it is always best have a written contract if you receive or expect to receive payment for caring for a relative.
Of course, having an agreement is not the end of the question.
Among other things, the value of the payment must not exceed the reasonable value of the care. Taking care to contemporaneously establish and document exactly what services are provided, and what the fair market value of these services is, can be crucial.
In addition, one must consider issues relating to all employment situations, including whether the care provider is an independent contractor, or whether the person is an employee who is subject to all the things that come with employment, from employment and social security taxes, to workers’ compensation and unemployment insurance issues.
It is important to carefully consider all of these issues before providing significant amounts of care, whether or not your first thought is that you should be paid for this.
In some cases, it will be wise and in the interests of both the person who provides the care and the person who receives the care for there to be a formal employment and payment system established. In other cases, one or the other may decide that this is not the best path forward after all. But in almost no circumstance is this a decision that should be made without considering the options.
Steven A. Heinrich
Divorce & Custody
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