This is a different story. Let’s say your father passed away years ago. Your mom, Ruth, has been living on her own for years. As often happens, things get to a point where she can no longer be left alone. It could be because she keeps falling or has dementia. Whatever the reason, you now have to put mom in a nursing home. It sucks. This is an extremely emotional decision for people but sometimes it has to be done.
You know nursing homes average $10,000 a month. Mom has some assets but at the rate of $10,000 per month she will blow through ALL her assets in merely months. However, you are told if someone has more than $2,000 in non-exempt assets they will not qualify for Medicaid. This is true but AGAIN there are things you can do to protect mom’s assets and get her on Medicaid.
One strategy is a personal services contract or a caregiver contract. Like all the strategies described here, they are complicated and you need a qualified Elder Law attorney to help you plan correctly. We are simplifying the strategies here so people can understand the basic idea, so their eyes don’t glaze over, and they know there is help.
So, a personal services contract (PSC) is a written agreement between 2 or more parties where one party agrees to provide personal services for the other party in exchange for fair market value compensation. In English — this means that mom enters into a contract with you (or someone else) so that you can do things like take her to doctor’s appointments, help her with legal and medical issues, help her with billing, help arrange meals, shopping, check up on her, etc. In exchange for that, mom pays you a lump sum of money. Here is the rationale: If you were not here to perform those services, you would have to hire someone else to do them to help mom. There is a real value to these services and that is the fair market value in the contract.
Bottom line - a PSC is a way to transfer assets from mom to someone else (to compensate them for these services) and thereby get mom under the asset limit so mom can qualify for Medicaid.