Despite legal and cultural presumptions against family caregiver agreements, state Medicaid agencies will approve payments to family members if certain conditions are met. In a recent Note in the Suffolk University Law Review titled “Eldercare for the Baby-Boom Generation: Are Caregiver Agreements Valid?” 45 Suffolk U.L. Rev. 1271 (2012), Sheena J. Knox outlines what works and what doesn't when it comes to family caregiver agreements and Medicaid.
Arguing in favor of an expansive use of caregiver agreements, Knox points out that the deck is stacked against a Medicaid applicant who pays a family member for care due to a variety of legal and cultural factors. To start with, Knox explains that historically courts have presumed that valuable services rendered to a family member were gratuitous, making it difficult to prove the existence of a contract between family members. This gave rise to the written caregiver agreement, which delineates the contractual arrangement and confirms the legal relationship between the parties.
Families also must contend with a cultural presumption against caregiver agreements. According to Knox, some hearing officers and judges may find that "[t]he very idea of charging a family member, particularly a parent, for care services runs counter to the Judeo-Christian ideal of honoring parents." She claims that "[t]hese assumptions of a moral duty among family members still appear in hearing officers' and judges' opinions."
Courts Focus on Three Characteristics
Despite the prejudices against Medicaid claimants who utilize caregiver agreements, more and more families of various economic backgrounds are turning to formal agreements in order to protect both the elder and the caregiver. Using Massachusetts as an example, Knox lays out three main factors that hearing officers and judges examine when determining whether a caregiver agreement represents a disqualifying transfer of assets from the elder to the caregiver.
First, a caregiver agreement must represent a transaction for fair market value. However, as Knox explains, "[d]etermining the prevailing price of elder care services . . . is not a straightforward process." Knox warns that the only price point that seems to work well is "when the caregiver provided frequent and labor-intensive services and received less than any conceivable fair market wage from the elder in return."
If a hearing officer or judge determines that a caregiver agreement does not represent a transaction for fair market value, she may still uphold the agreement if the elder can show that the transfer was made exclusively for a purpose other than to qualify for Medicaid. Knox argues that the written caregiver agreement proves intent, but with the caveat that "hearing officers and judges disagree as to how specific the written agreement must be. In many cases, judges emphasize the issue of timing, wanting to ensure that an agreement was written prior to services being rendered.”
Finally, a caregiver agreement must also be legally and reasonably enforceable. Knox writes that "while there are multiple difficulties in ensuring that a written agreement is reasonably and legally enforceable", the easiest way to avoid problems is for the caregiver to perform ongoing services and receive payment for those services contemporaneously. The problems seem to arise when the elder prepays for services that she may never receive, since "specific performance of a personal services contract is not an available remedy for breach of a caregiver agreement" giving "little incentive for caregivers to strictly fulfill all the terms of their agreement."
To read Knox's copiously footnoted analysis of caregiver agreements and why she believes that expanded use of caregiver agreements promotes stability for women, click here.
For a related recent law review article, see Thomas P. Gallanis and Josephine Gillter, "Family Caregiving and the Law of Succession: A Proposal," 45 Univ. Mich. J. L. Reform 4 (2012).
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