Personal Care Agreement | 42 USC 1396p Look-Back Compliant

Strip away the family context and a personal care agreement is an ordinary services contract: one side promises defined work, the other promises defined pay. What makes it distinctive is who signs it. The caregiver is usually a relative who would have done the same work for free, and the payer is someone whose Medicaid application will one day be read line by line by a state eligibility worker.

Several names circulate for the same instrument. Personal services contract is the phrase Florida caseworkers recognize, caregiver agreement dominates New York practice, and life care contract signals a prepaid version rather than pay as you go. None of them is a power of attorney. A caregiver contract buys labor; a durable power of attorney for finances grants legal authority to act for the principal. Families usually need both, because the person receiving care often cannot sign the contract that pays for their care. Where the agent is also the proposed caregiver, that conflict has to be resolved on the face of the document.

Federal law does the heavy lifting. Under 42 U.S.C. section 1396p(c)(1), a state must impose a period of ineligibility when an applicant for institutional Medicaid or home and community based waiver services disposes of assets for less than fair market value inside the look back window. The Deficit Reduction Act of 2005 stretched that window from 36 to 60 months and moved the penalty start date to the first day the applicant would otherwise be eligible, which is exactly when the money is gone. The penalty is arithmetic, not discretion: uncompensated value divided by the state average private pay nursing facility rate yields the ineligible months.

A personal care agreement works because section 1396p(c)(2) lifts the penalty where the applicant received fair market value in exchange. States presume that services between relatives are gratuitous, so the applicant carries the burden of proof. Three elements rebut that presumption: a contract in writing and signed before the first hour of service, a rate matching what a licensed agency charges in the same county, and hours logged as they are worked. Compensation for care already delivered is never accepted. The statutory text, including the caretaker child exception at section 1396p(c)(2)(A)(iv) for a child who lived in the home and provided care for two years, sits in the Cornell Legal Information Institute edition of 42 U.S.C. 1396p on liens, adjustments and transfers of assets.

Tax law is the half families forget. Payments are taxable income to the caregiver, and where the recipient controls what work is done and how, the caregiver is a household employee rather than a contractor. That pulls in Schedule H, a Form W-2, and the rules in IRS Publication 926, on the same logic as a household employment agreement for a nanny or home aide. The section 3121(b)(3)(A) exclusion reaches only a child under 21 working for a parent, so an adult son or daughter sits inside the FICA rules.

The classic trigger is a diagnosis. A parent comes home from the hospital needing help with bathing, medication, and transport, one adult child cuts back to part time work, and the family starts moving money informally. That phase is the dangerous one, because those transfers already sit inside the look back window with nothing on paper to explain them. The second trigger is a spend down: an applicant holds savings above the state asset limit, and a properly priced contract converts countable cash into paid for services rather than a penalized gift. Sibling politics drive the third: an hourly rate and a service log settle the inheritance argument before the estate is opened.

Two edge cases are worth flagging. A caregiver already paid through a state consumer directed program cannot bill the same hours twice, so the private contract has to cover services outside the authorized plan of care. And when the recipient lives in a nursing facility, the agreement must be built around advocacy and outside appointments, because paying a relative for services the facility is already licensed to provide is the fastest route to a denial.

• The identification and capacity of the parties names the recipient and each caregiver and records how the recipient signs. Where an agent signs under a power of attorney, the template adds the authority recital and, if that agent is also the caregiver, an independent approval mechanism.
• The scope of services breaks care into activities of daily living, instrumental activities, and advocacy tasks such as attending medical appointments or managing bills. Drafting like "general assistance" is replaced by itemized duties, because a caseworker prices duties.
• The compensation clause states an hourly figure supported by a named benchmark, usually a local agency quote or county wage data, and records how the rate was set so the file carries its own evidence.
• The schedule and payment terms fix weekly hours and a payment cycle, and state that no payment covers services rendered before the effective date.
• The recordkeeping clause obliges both parties to keep a contemporaneous log of dates, hours, and tasks. This single clause decides more Medicaid applications than every other provision combined.
• The medical information clause authorizes the caregiver to receive protected health information, which normally needs a companion HIPAA authorization for release of medical records before a hospital will cooperate.

Florida is the friendliest jurisdiction for this planning. The Fourth District Court of Appeal upheld a lifetime caregiver contract in Thomas v. Department of Children and Families, 707 So. 2d 954 (Fla. 4th DCA 1998), and the Department still accepts prepaid lump sum contracts priced against its own life expectancy tables. The ESS Policy Manual sets the look back at 60 months in section 1640.0608 and values support and services in section 1640.0614.04. Get the actuarial math wrong and the excess is recharacterized as a gift, so the term must never exceed the tabled life expectancy.

New York applies the federal 60 month look back to nursing facility coverage through 18 NYCRR section 360-4.4. The separate 30 month look back for community based long term care, authorized by Part DD of Chapter 56 of the Laws of 2020 and codified at Social Services Law section 366(5), reaches transfers made on or after October 1, 2020 but has never been enforced, since the state still lacks the federal waiver and state plan approvals. Treat that delay as temporary. Local districts are strict about contemporaneous logs and reject reconstructed timesheets.

California rewrote its rules twice in quick succession. Medi-Cal removed the asset test for non-MAGI programs effective January 1, 2024, then reinstated an asset limit effective January 1, 2026 under Department of Health Care Services guidance. Transfers made in the two intervening calendar years fall outside review, and penalties resume only for transfers on or after the reinstatement date. California also runs a 30 month look back rather than the federal 60.

Texas takes the strictest documentary line. HHSC applies the full 60 month look back and expects compensation to track hours actually delivered, so prepaid lump sums draw scrutiny that a pay as you go schedule avoids. Texas is a community property state, so a spouse's resources are counted, and an agent acting under Chapter 751 of the Texas Estates Code needs express authority before signing a contract that pays that agent. Elsewhere the same three pillars hold: written before service, priced at market, logged as performed. Families pairing this contract with a revocable living trust drafted to Uniform Trust Code section 602 should have both reviewed together, since they interact at estate recovery.

You begin by selecting the state where the care recipient lives, which sets the look back period, the notarization rule, and whether your agency accepts a prepaid structure. The form then asks who signs for the recipient, and if the answer is an agent under a power of attorney it adds the authority recital and the conflict provisions. From there you build the scope of services from a checklist of daily living tasks, instrumental tasks, and advocacy duties, and the document turns those selections into itemized obligations rather than a generic promise of help.

The rate section asks for your hourly figure and the source you used to justify it, then writes that source into the contract so the evidence travels with the document. The effective date locks forward, since backdating invalidates most of these agreements. Final questions cover weekly hours, payment cycle, tax classification, medical information access, and termination. You then download an editable Word file, a print ready PDF, and a service log. Related documents sit in the personal legal document templates for the United States.

The most expensive mistake is timing. Families sign the agreement the week they file the Medicaid application, after two years of informal payments, then discover the contract protects nothing that came before it. A close second is a rate pulled from thin air. An hourly figure well above local agency pricing is treated as a partial gift, and the excess gets penalized even though the contract itself is valid. Vague drafting causes the third failure. "Helping mom around the house" cannot be priced, and a caseworker who cannot price the services cannot credit them.

The rest are administrative and just as fatal. Nobody keeps the log, so at review the family produces bank statements showing regular transfers and no proof of what was delivered for them. Nobody reports the income, which hands the state an argument that the payments were always gifts. Notarization gets skipped in states that expect it. In facility cases the contract lists bathing and feeding the nursing home already provides. Sign, log, report, and keep the paperwork in one place from the first day.