Almost all elderly individuals have received some kind of care from a family member or a friend. Some of those people may have even paid their loved ones for that care, but chances are good that few, if any, used a Personal Care Agreement to document the caregiving arrangement or the payments. If they had, they could use those payments to help them qualify for Medicaid long-term care coverage in assisted living facilities, nursing homes or at home.

In short, a Personal Care Agreement (PCA) is a written contract between a care recipient and a caregiver. It establishes what kind of care will be provided, including when and where it will be provided, and how much the recipient will pay for that care. The document must follow certain guidelines to meet Medicaid standards, but one does not need a lawyer or a notary public to create a PCA, and there is no standard PCA form.

Benefits of a Personal Care Agreement

If elderly individuals use a Personal Care Agreement, they can pay for future care to reduce their current resources and become financially eligible for Medicaid. Without a PCA, paying for future care within five years of the senior’s application date (in most states) would violate the Look-Back Period because it would look like the senior was simply giving away their assets to become eligible. So, not only does the PCA help the senior gain eligibility by reducing assets, it also ensures they do not face a penalty period of ineligibility for violating the Look-Back Period.

Another benefit of a PCA is that ensures the senior will receive a certain level of care in the future, no matter what kind of Medicaid coverage they have. Most seniors who use a PCA will probably be covered by a Home and Community Based Services (HCBS) Waiver and will be living in their own home, the home of a loved one, an assisted living facility or some other setting in the community where they will need a caregiver to provide long-term care services and supports. Seniors who have Nursing Home Medicaid are less likely to use a PCA, but they are allowed to have caregivers provide some services for them on top of the care they receive in the nursing home.

A PCA can also help a family member or friend receive money for care they might have been giving for free. The family member or friend may not have accepted any payments because they want to support the senior as much as possible, but if they know the payments will help the senior qualify for Medicaid they may choose to take the payments. This also allows the senior to pass on their money to a loved one (even if they are earning it) as opposed to giving it to the state or someone they don’t know to provide the care they need.

Personal Care Agreement Requirements

As mentioned above, there is no standard PCA form. However, in order to be recognized by Medicaid, the actual PCA document must contain the following:

• Comprehensive description of services to be provided
• Frequency services will be provided
• Location services will be provided
• Pay rate and frequency for services provided
• Caregiver start and end dates
• Modification clause (allows either party to change the contract)
• Termination clause (establishes guidelines to end the contract)
• Signatures

PCA payments can only be made for future care, they can not be made for care that has already been given. These payments can be made on a regular basis, like paying once or twice a month, or there can be one lump sum payment that covers the entire length of the PCA. The lump sum total must be calculated using an actuarial life table, and not all states allow for lump sum payments. Either way, the amount and frequency of the payments will be established in the PCA. But those details can be modified if the circumstances change (like the senior’s care needs increase) and as long as that type of change is allowed by the PCA’s modification clause.

PCA Caregiver Requirements

The caregiver in a PCA can be a family member, a friend or anyone else, for that matter. However, in order for a senior to use the PCA as a Medicaid planning tool to reduce assets, the caregiver should not be their spouse because Medicaid counts all assets of a married couple to be jointly owned. So, the money the senior would use to make the caregiver payments to their spouse would be counted against their asset limit anyway.

The caregiver compensation should be close to the average rate that a private personal care provider would receive in the same geographic region. If the pay rate is too high, it may be interpreted as the senior giving away assets, which would be in violation of the Look-Back Period.

After the PCA has been established, the caregiver should keep a comprehensive log detailing all of the long-term care services and supports provided. This should include when and where the care was provided and payments they received for that care. This document and the PCA can be used in conjunction to clearly illustrate the working relationship between the caregiver and the senior.

When to Create a Personal Care Agreement

In order to be used for Medicaid purposes, the PCA should be created before any care is provided or paid for. This way, the payments will only be for future services. Paying for past services could violate the Look-Back Period and lead to a penalty period of ineligibility.

The PCA should also be created while the senior still has their full mental capacities, otherwise it might not be allowed by Medicaid. However, if the senior has a Power of Attorney that was created while they were mentally aware, the person with the Power of Attorney could create a PCA on the senior’s behalf.

Again, one does not need a lawyer or a notary public to create a Personal Care Agreement but Medicaid expertise is essential. Consult with our team of professionals before creating a PCA, or refer a client to us directly.