If my father pays me to care for him, does Medicaid consider that sheltering money?

A fellow caregiver asked...

Can my father pay my sister or me to take care of him out of his own assets without Medicaid looking at this as a way to shelter his money? And if yes, how much per month?

Expert Answer

In general, the answer is yes, Medicaid look-back rules allow your father to pay a family member for caregiving, as long as you or your sister actually do the caregiving and the amount your father pays is reasonable for the work you do. (By the way, although you didn't mention it, it seems that you're concerned about Medicaid coverage for nursing home care, if and when your father eventually needs it. If you're only talking about Medicaid coverage of medical care, there are no look-back rules to worry about.)

When deciding your father's eligibility for nursing home care, Medicaid imposes a five-year "look-back" period. For the five years before he applies, Medicaid will consider any large or regular payments he's made. That would include regular payments he's made to you or your sister. If your father has spent money for a legitimate purpose at fair market value -- as opposed to giving the money away, or paying exorbitant amounts for the goods or services received -- then Medicaid won't count that money as part of his assets when deciding on his eligibility. Under these rules, paying you or your sister to provide care at home is certainly a legitimate expense. But Medicaid will also want evidence that the care was actually provided and that the amount your father paid for the care was reasonable.

There's no set dollar amount for how much your father can legitimately pay you for such care. But the amount he pays has to be a reasonable amount for the type and amount of work you do. Medicaid will decide that reasonableness based on what it would cost to hire someone from outside the family to perform the same work, in the area where you live. Medicaid will look at the tasks you or your sister performed, how often you performed them, and what it would have cost to hire an independent home care aide to do the same work. The national average for independent home care aides (not employees of a home care agency) is now about $20 per hour. But it may be a bit more or less than this where you live. You can check newspaper and online advertisements for home care aides in your area to see what the average rates are.

One way to later provide evidence to Medicaid that your or your sister's care for your father, and the pay he gives you, is legitimate is to draw up a written caregiver agreement with your father. This should set out the tasks you'll perform, the hours you'll spend doing them, a schedule (to the extent you can set one up), and how much you'll be paid. This agreement can be changed over time as your duties, hour or pay changes.