Under Florida Medicaid program guidelines, individuals have to meet specific income eligibility limits to qualify. Those who own a significant value in assets may need to find more creative ways to plan ahead and not exceed these limits. This is often accomplished through the creating of irrevocable trusts to hold this property to make them non-countable.

Another popular option to help preserve your eligibility for important federal and state assistance programs is personal service contracts. With the assistance of a skilled Florida Medicaid planning attorney, you could draft one of these service agreements and help further reduce the value of your countable assets and property.

What is a Personal Services Contract?

A personal service contract is a specially prepared contract between you and a chosen caregiver. This agreement not only outlines the details of your care and sets up payment for their services throughout your lifetime. Anyone can be a designated caregiver, but it is customary to choose a family member you are close with that is taking care of your needs as you age.

Keep in mind that the services provided by your caregiver are those that are not already addressed by another agency, like an assisted living facility or nursing home. Duties of care could include:

• Going to physician’s appointments.
• Transportation
• Being company and entertainment for you, among other things.

Payment for their services is typically calculated for the expected lifetime of the individual receiving care. This is generally paid upfront in a single, lump sum payment.

How does a Personal Services Contract Affect Medicaid Eligibility?

The biggest question you might have is how exactly a personal services contract can help you meet Florida Medicaid eligibility. To get a better idea of how this would work compared to simply transferring money to your children, read the two examples below:

• Imagine you are $80,000.00 over the Florida Medicaid eligibility limits for assets. By hiring a knowledgeable estate planning attorney, you can draw up a personal services contract for that amount with your son that cares for you. Bear in mind that any amount you agree to pay must be reasonable for the services rendered. Once signed and agreed upon, this money gets transferred to your caregiving son.
• If you are $80,000 over the asset limit for Florida Medicaid, you may choose to simply transfer $40,000 to each of your two children. Even though this action helps you stay under the cap, these transfers are seen as gifts, potentially delaying your eligibility and costing you thousands.

These two comparisons highlight the importance of meeting eligibility requirements without risking a delay in crucial benefits. Florida law does not treat personal services contracts as gifts when drawn up lawfully, and this means Medicaid will not impose penalties on the applicant as a result.

Does the Remaining Personal Services Contract Money go to Florida Medicaid if I Die?

So long as your services contract was legal and your caregiver performed the work which can be accounted for, the money does not go back to Medicaid. This is because they are only entitled to assets or money that belongs to the Medicaid recipient. Funds in one of these agreements belong to the person providing your care.

This is also why many retirees applying for Medicaid benefits designate a relative as their caregiver. Because they are chosen to take care of the named Medicaid recipient for their remaining lifetime, the lump sum paid in the contract covers the lifespan of the applicant. Whether you should outlive the estimated time period in the personal services contract or pass away two weeks after signing, any funding remaining goes to your caregiver.

Mistakes to Avoid in a Personal Services Contract

Creating a personal services contract that is legal under Medicaid guidelines can be challenging without an experienced Florida elder law attorney guiding you. Due to strict eligibility requirements, state and federal assistance programs will deny these agreements over minor mistakes.

Below are just a few of many common mistakes that need to be avoided:

Not Knowing Florida Medicaid Rules Regarding Personal Services Contracts

One of the easiest mistakes to make is writing up an unlawful agreement. Without a thorough understanding of state eligibility rules, failing to have a signature notarized, for instance, could compromise your contract.

Giving a Caregiver Retroactive Pay

It is also important that you are not paying your caregiver retroactively in your personal services contract. These agreements only cover costs from the future start date that their care begins.

Using an Unreasonable Rate of Pay

Before simply deciding on any arbitrary amount, you should do your research and make sure your rate is reasonable. Too high, and Medicaid may consider the contract a sham contract trying to disguise a gift.

Don’t Delay in Setting Up Your Agreement

The rate of pay in a personal services contract is based on your life expectancy. The older you are, the shorter the period, which means less money being able to get transferred under these agreements. It’s better to use these as a pre-planning tool while your life expectancy is still high.

Speak with a Highly Trained Florida Medicaid Planning Attorney

Because personal service agreements are legal contracts with specific requirements under Florida law, it is crucial to create a valid agreement.  Our elder law attorney will work with you to create a personal services contract that will provide beneficial care and help you meet these asset eligibility rules. Call us today at (954) 999-9683 or contact us online to discuss your unique situation, learn more, and get started.