PERSONAL SERVICES CONTRACTS

If an individual seeking benefits under Florida’s Medicaid program, they may be deemed ineligible due to owning too many assets. Although there are options available for the applicant to lower their income and asset level (such as non-countable or exempt assets and creating irrevocable trusts to hold assets), these may still not be feasible or would be too complex for an applicant to handle. However, there is still one other option: creating a personal services contract.

The experienced Medicaid planning attorneys at Gorman & Jones, PLC can draft the personal services contract needed to ensure your Florida Medicaid eligibility requirements are met. Contact the law offices of Gorman & Jones, PLC in Tampa at (813) 856-5625 for honest advice and answers to all your personal services contracts questions.

What is a Personal Services Contract?

A personal services contract is an agreement between an applicant and designated caregiver which details the care provided by the caregiver to the applicant. Although this designated caregiver can be any person, it is typically a close family member (such as an adult child of the applicant). The caregiver would be providing the services to the applicant that are not already being provided by a skilled nursing home or assisted living facility. These can include transportation, attending doctor’s appointments with the applicant, attending meetings with attorneys, general entertainment and company of the applicant, among others. Under the personal services contract, the caregiver’s payment for their services to the applicant are calculated based on the applicant’s life expectancy and then the payment is made to the caregiver in one lump sum payment upfront.

How does a Personal Services Contract Help?

You may be wondering how this can help meet the eligibility requirements under Florida Medicaid programs. Here is an illustration of how a personal services contract can help meet your eligibility requirements:

  • Applicant is $50,000.00 over the eligibility limits for Florida Medicaid’s asset requirement. Applicant chooses to transfer $10,000.00 to each of his children to lower his asset value. This transfer would be considered as a gift and would impose a penalty, potentially costing the applicant thousands of dollars and a delay in receiving benefits.
  • Applicant is $50,000.00 over the eligibility limits for Florida Medicaid’s asset requirement. Applicant hires an attorney to create a personal services contract and transfers $50,000.00 as payment for his daughter’s services as his caregiver (provided that $50,000.00 is of fair value for the services). This transfer would not be considered a gift and would not trigger a penalty, since it is payment for services to be rendered under the personal services contract.

As you can see in the illustrations, a personal services contract can effectively lower the assets owned by the applicant and help them meet the eligibility requirements of Florida Medicaid. It has been settled under Florida law that a personal services contract that has been properly created will not be considered as a gift. Therefore, this transfer will not impose a penalty for the applicant, making it an invaluable tool for helping Florida Medicaid applicants to legally spend-down their assets.

What is the Calculation for Fair Rate on a Personal Services Contract?

As convenient as it would be to simply have the disqualifying value of assets you own listed as the rate under a personal services contract, it is simply not that easy. Under a personal services contract, the caregiver must be paid a “fair rate.” Thankfully, there is a calculation that has been created to generate a fair rate under a personal services contract. The calculation is as follows:

Hourly Rate x Estimated Hours of Weekly Work x 52 x Life Expectancy

The hourly rate of a professional caregiver is between $75.00 to $130.00 per hour, so the discounted rate for a family member (who is not a nurse or medical professional) stepping into the role of a caregiver would be severely discounted. Additionally, the life expectancy of the applicant is based on Florida Medicaid’s life expectancy actuarial tables. (See life expectancy table for this life expectancy information).

Timing is Key: Early Bird Gets the Worm

Because life expectancy is a factor in determining the fair rate under a personal services contract, the older an applicant is when creating a personal services contract, the less they can transfer under this document. The less money able to be transferred to a caregiver under a personal services contract, there is more of a need for the applicant to rely on other avenues to be able to afford their care. Therefore, a personal services contract should be utilized as a tool in pre-planning while the applicant’s life expectancy is still high enough to justify creating this document. Contact the law offices of Gorman & Jones, PLC in Tampa at (813) 856-5625 for honest advice and answers to all your personal services contracts questions.

Since personal services contracts need to adhere to specific requirements to ensure that the applicant does not inadvertently trigger a penalty or cause a significant tax liability, hiring an attorney knowledgeable in personal services contracts for this purpose is paramount. The experienced Medicaid planning attorneys at Gorman & Jones, PLC can draft the personal services contract needed to ensure your Florida Medicaid or eligibility requirements are met. Contact the law offices of Gorman & Jones, PLC in Tampa at (813) 856-5625 for honest advice and answers to all your personal services contracts questions.

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