Can I Be Paid to Provide Care for Mom? (Part 2)

So, we were talking last week about a recent New Jersey case in which Daughter and Mom entered into a life care contract for Daughter to provide personal care services to Mom.  Mom then applied for Medicaid and her application was denied.  Mom appealed that decision and lost at the first level of appeal and just lost again on the next level.  Why did this happen and what can we learn from their case that would help us avoid the same result?

 A big problem with this contract was the fact that it was a lump sum payment.  Daughter was paid $56,000 before she even performed a single hour of services.  Now, this was necessary in order to spend down to below $2000 for Mom to be under the asset limit.  And, every attempt was made to calculate an amount that was based on fair market rates.  In fact, the rate was at the low end of that scale. 

 However, there were other parts of the contract that the court found objectionable.  For example, the contract stated that the caregiver was not obligated to devote full time to care since Daughter had a career and family to attend to.  She would devote as much time as she could to providing care.  The contract anticipated the average amount of time would be 15 hours or more.  The contract also stated that the $56,000 due under the contract was not dependent on the exact amount of time Daughter worked and that if Mom canceled the contract Daughter would be paid under the assumption she had worked 15 hours per week.

 The court found the contract to be one-sided.  Daughter was not obligated to perform any minimum amount of services.  Her compensation was not tied to actual performance.  In the normal commercial transaction would anyone pay for something without being sure what they were going to receive?   And, although the court didn’t specifically mention it, I think the fact that Mom was in a nursing home and not at home receiving care may have also had something to do with it’s decision.  The nursing home was providing 24/7 care so what Daughter would provide in the way of services was even less certain.

 So, does this mean that a child can’t be paid for providing care to a parent?  Absolutely not.  But, the line between what works and what doesn’t isn’t a black and white one.  That’s why cases like this help us define it with a bit more clarity so that we, as elder law attorneys, can help our clients decide what the best course of action is in their particular situation, as we guide them through what we call the elder care journey.