A personal services agreement permits an elderly person to pay adult children for caregiving while still preserving the eligibility of their long-term Medicaid benefits. The contract itself prevents lawsuits from happening and uncompensated transfers that count against the Medicaid eligibility.
When writing up one of these agreements, it is important to keep the following criteria:
The nature of services must be specific, there must be proof of payments, documentation must be provided, the recipient must pay income tax and the recipient must pay self-employment tax on the income. In order for the agreement to be accepted, it must meet all of these key elements.
Most of the time, paying a relative for care is the safest and most cost-efficient way to handle caregiving. However, it is crucial to know how to structure your agreement so that these arrangements can be made. And it’s always best to have a legal professional who concentrates in these areas to help you set up the agreement.