10 March 2015

Elder Law and Medicaid: Paying a Non-Family Caregiver? DHS May Call it Divestment

A recent Michigan Court of Appeals decision has played havoc on the rules surrounding payments to non-family caregivers. DHS rules regarding payments to caregivers state that payments are divestment in two situations: 1) prospective payments made to any caregiver (family or non-related) before care is provided, and 2) payments to family caregivers absent a Medicaid qualified caregiving contract. The Court of Appeals decision, Jensen v. Department of Human Services, confuses the rules and applies the family caregiving contract requirements to all caregivers, even professional caregiving agencies. The result of the case is that payments to non-family caregivers may be divestment unless the Medicaid applicant has a contract with the caregiver meeting the extremely specific rules found in the Medicaid manual.

Caregiving Contract Rules

Under Medicaid’s rules, a caregiver contract with a relative (defined as anyone related to the client by blood, marriage or adoption) will be a divestment unless very strict requirements are met.

  • Caregiving Services must be performed after a written legal contract or agreement has been signed by the client or legally authorized representative (agent under durable power of attorney, guardian or conservator) and relative providing the care;
  • If someone else signs on behalf of the Medicaid applicant, the person that signs cannot also be the caregiver;
  • The contract must be dated and notarized;
  • Caregiving services cannot be paid in advance (paying for future services is a divestment!);
  • At the time services are provided, the client cannot be in long-term care, including a nursing home or hospital;
  • At the time services are provided, the client is not eligible for Medicaid home and community based waiver, home health, or home help;
  • At the time services are provided, a doctor has prescribed or recommended in writing that the services are necessary to keep the client out of skilled nursing; and
  • The services cannot include companionship services (meaning spending time with the Medicaid applicant).

Under the Jensen decision, Medicaid can now apply these rules even to contracts with non-relative caregivers.

What it Means for Medicaid Applicants

If the rules continue to be interpreted this way, the impact on current and future Medicaid applicants could be devastating. Payments to non-family caregivers, even to professional caregiving agencies, made in the absence of a Medicaid qualified caregiving contract may be divestment. Because the rules require that the contract be in place at the time services are provided, potential Medicaid applicants cannot “cure” the past payments to non-family caregivers by executing a Medicaid qualified caregiving contract. Divestments cause penalty periods during which Medicaid will not pay the cost of long-term care. Families who hired non-related caregivers to provide care to their loved one, in compliance with Medicaid rules, may now be faced with potentially lengthy penalty periods due to this radical shift in Medicaid policy interpretation.

We will continue to keep you updated on any changes or developments in Medicaid’s treatment of caregiving contracts.