When a loved one needs care, family members step up and provide care at home. Because this time-consuming task often takes them away from their main employment, the patient pays the family member for care.

Under Illinois long-term care Medicaid rules, if you pay a family member for care, the money paid to them is considered a gift (also called an unreimbursed transfer or divestment). Medicaid assumes that a family member should care for a loved one gratuitously and any money that changes hands in meant to artificially divest the patient below the asset limits.

When the patient later needs assistance with home care or nursing home care through Medicaid, all of the payments for care made to family members within the last five years are added up and used to compute a period of ineligibility for Medicaid, known as a divestment penalty period. Paying a family member for care can unsuspectingly trigger huge Medicaid penalties!

There is a way to pay a family member for care in Illinois and still qualify later for long-term care Medicaid.  Medicaid allows for the patient to enter into a very strict Family Caregiver Agreement with a family member to provide the care and be paid. The agreement must provide that care is paid for when it is provided and at a reasonable rate.  The care must be necessary, as certified by a physician.

When paying a loved one for care, properly, the payments are not considered transfers and the patient is not penalized for the payments when they apply for Medicaid. Additionally, if the patient is a veteran or the spouse or widow of the veteran, the payments made under the Family Caregiver Agreement may also qualify the patient for financial assistance from the VA.

It is recommended that you do not pay a family member for care unless you set up a valid Family Caregiver Agreement.  To see if a Family Caregiver Agreement is right for you, request a free consultation today.

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