The Personal Services/Care Contract is an employment contract entered into between the elder care receiver and typically the adult child care giver. The contract specifies the term of the contract, the services to be provided, the rate of pay, and how the rate of pay is established and paid.

The goal is to transfer funds to a family member so the funds will be available to provide services above and beyond those provided by Medicaid without incurring a Medicaid eligibility transfer penalty. Once the money is transferred to the adult care giver it is free and clear of Medicaid and may be used for any purpose desired by the adult-child employee.

This, of course, brings up the issue of whether this is a good idea to begin with or not. Transferring money to adult children is usually done with the best of intentions … and most adult children I have encountered do have their parent’s best interest at heart. The problem is that this is not always the case and if the child decides to they may use the money on a  cruise instead of taking care of mom or dad. Moreover, things do happen that are out our control … divorce, accidents, etc. where funds could now be exposed to the claims of creditors. Therefore, when establishing these arrangements it may be helpful to place the funds received in a trust or to use an immediate annuity as the payment vehicle.

With respect to income taxes, yes, the recipient is obligated to pay ordinary income tax and FICA. The employer-parent is also responsible for FICA and FUTA. It is difficult to claim independent contractor status when providing services to only one individual.

Put bluntly – take care of mother or we will steal her  house.


lenin nightingale 2017

About leninnightingale

A nurse who for decades challenged the nursing establishment, echoing the voices of the silent many- the downtrodden nurses, students, care assistants, patients, and relatives that the 'system' overlooks. This site will present issues that many fear to engage in, prefering to believe what they are told by the Government's 'Ministry of Truth' (i.e. 'Lies').
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