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Personal Care Contracts as Long-Term Care Option

If you are familiar with personal care contracts, you probably have a general idea of how they work. An ailing or order individual would prefer to remain in a private residential environment as opposed to moving to an assisted living facility, but still needs help with routine activities; a family member or other loved one may be willing to fulfill this role. As such, the parties execute a written agreement to define the relationship between caregiver and care recipient.

Of course, there is much more to personal care contracts than simply signing the paperwork. The arrangement must still comply with Michigan law, particularly as the agreement impacts Medicaid. A Michigan long-term care planning lawyer can provide details, but some answers to frequently asked questions may be helpful.

What Should be Included in a Personal Care Agreement?

The contract should be specific in defining the relationship between the caregiver and recipient, especially when outlining the services to be provided and the rate of pay. You may need to address such details as:

  • When and where care services will be provided
  • Transportation for doctor’s appointments, shopping, and other errands;
  • Housekeeping services the caregiver will provide, if any;
  • Whether the caregiver is responsible for basic medical needs, such as administering medications; and,
  • Any other issues, depending on your circumstances.

How Does a Personal Care Contract Affect Michigan Medicaid?

It is important to note that the agreement must comply with Michigan’s Medicaid laws, or the recipient could jeopardize future eligibility for assistance. The reason is that Medicaid imposes a $2,000 ceiling on how much an individual can own and still qualify for benefits. If a person transfers certain assets within the five years prior to applying for Medicaid, these amounts will be included in assessing net worth. The result is that the individual’s may possess more than the $2,000 limit, so Medicaid is not an option.

When a person makes payments under an informal personal care arrangement, these amounts may be viewed as gifts. By putting the agreement in writing, with the essential components of a binding contract, the recipient may still qualify for Medicaid.

What are Some Common Mistakes People Make When Creating a Personal Care Contract?

Even a slight error can result in a denial of Medicaid assistance, such as:

  • Paying the caregiver retroactively instead of advancing amounts for future care;
  • Failing to keep a daily log of services, appointments, and payments;
  • Implementing an unreasonable rate of pay, instead of an amount that would be appropriate in the relevant market; or,
  • Not complying with other Michigan laws that pertain to personal care agreements and their impact on Medicaid eligibility.

Our Team at The Nawrocki Center for Elder Law can Provide More Details

Hopefully, these answers to common questions about personal care contracts are helpful, but you may need additional information regarding your specific situation. Plus, it is important to get legal help when it comes to drafting an agreement that complies with Michigan Medicaid requirements. To learn more about our services, please contact The Nawrocki Center for Elder Law at 810-893-5277 or via our website.


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