New York Elder Law Attorney Blog

by Bonnie Kraham, Esq.

Family members overwhelmingly provide the care for elderly and disabled loved ones at home. Although a labor of love, taking care of ailing loved ones also has a market value, meaning that caretakers can be paid as a way to protect assets.

Through the use of a Caregivers Agreement, also known as a Personal Services Contract, the disabled or elderly person can transfer money to family members as compensation rather than as a gift. Gifts to family members made in the last five years before applying for Medicaid to pay for nursing home costs disqualify the applicant from receiving Medicaid for a certain period of time, known as a "penalty period."

For example, Mom depends on daughter Janice for her care. If Mom gifts $100,000 to Janice, then goes into a nursing home in the next five years, and applies for Medicaid, the gift to Janice will result in about a nine month penalty period. Janice will have to give the $100,000 back to Mom to pay nursing home costs during the penalty period, or Mom will have to use other resources to pay.

Instead, using a Caregivers Agreement, Mom pays Janice $2,500 per month for caregiving services. If Mom moves to the nursing home in the next five years, the payments to Janice are compensation, not gifts.

Caregivers Agreements must follow strict rules, so should be drafted by an experienced New York elder law attorney.

The Caregivers Agreement must detail the services to be performed and the obligations of the parties. The payment is based on the going rate of caretaking in that county. Compensation is clearly delineated with hourly and yearly calculations for 24-hour personal care.

Janice must actually give the care and document her caretaking duties. Mom must actually need the care, which should be documented with a doctor's note.

To protect family relationships, it's recommended that all family members agree with the arrangement even if they are not parties to the agreement.

Janice has tax consequences. She reports the payments as ordinary income on her income tax return and pays income taxes on the compensation. In some cases, Mom may be able to deduct the payments as a medical expense.

A proper Caregivers Agreement arrangement can be a valuable elder law planning tool in the right circumstances.

by Bonnie Kraham, Esq.

Medical orders for life-sustaining treatment (MOLST) forms are medical directives signed by a doctor and used to convey a patient's wishes regarding life-sustaining treatment. The purpose is to improve the quality of care seriously ill people receive at the end of life.

The form does not replace a health-care proxy and living will, which are completed in advance and apply only when you can't speak for yourself. In a health-care proxy, you appoint an agent to make medical decisions for you if you no longer can. In a living will, you state your wishes regarding life-sustaining treatment.

By contrast, a MOSLT form is only for the seriously ill, applies in the present and contains medical orders based on the patient's wishes after discussions with a doctor.

A survey by BlueCross revealed that only 42 percent of those surveyed had chosen a health-care proxy, so a majority are without an advance directive for medical decisions.

A new law addresses the gap in advance directives. The Family Health Care Decisions Act, effective June 1, allows a close family member or friend to make health decisions for incapacitated loved ones who do not have a health-care agent or didn't previously make such decisions. New York now joins most of the country in allowing loved ones to make health-care decisions for the incapacitated at the end of life.

The MOLST form reflects the new law in that surrogates (agents) as well as the patient or patient's health-care proxy can communicate the patient's desires for life-sustaining treatment.

The Family Health Care Decisions Act designates, in order of priority, who can act as a surrogate for the adult incapacitated person. The first surrogate is the spouse or domestic partner. The list then includes adult child, parent, sibling, and last, a close friend. If the court has appointed a guardian, that person takes priority.

Decisions are based on the patient's wishes or the patient's best interests if his or her wishes are unknown.

The MOSLT form and Family Health Care Decisions Act are advancements to honor each person's end-of-life desires regarding medical treatment.

However, it can't be emphasized enough -- the best way to honor desires regarding end-of-life medical treatment is to consult with a New York elder law attorney to complete a health-care proxy and living will in advance, while you're well.