Imagine this scenario: Your mother or father becomes ill. You have a good job that allows you to support your family, but you feel obligated to help your parent. Your parent has sufficient assets to hire an aid or third-party caretaker, but your parent wants you to help them.
You give up your job and begin taking care of your parent. Your mother or father realizes that you need to support your family so they offer to pay you for the services you are rendering them. In this situation, they end up paying you less than half of what you would make if you worked in your established profession. Their agreement to hire you is called a personal service agreement.
In the past, Medicaid would find that the personal service agreement was an uncompensated transfer, and before your parent would become eligible for Medicaid payments should he or she enter a nursing home, these funds would have to be returned. However, there is a new case in New York in the Fourth Department of the Appellate Division that has found otherwise. In the matter of Warren Kerner v. Monroe County Department of Human Services (NY App., 4th Dept., No. TP-10-00-00197, July 2, 2010), the court set aside a determination that a nursing home resident’s son receiving payments from his parent were uncompensated transfers.
Warren Kerner needed to go to a nursing home in July of 2007. He had previously entered into a personal service agreement with his son Jonathan. Pursuant to the terms of the agreement, Jonathan was paid approximately $9,200 a month to provide care in his home for his father. Warren eventually had to be admitted to a nursing home.
An application for Medicaid was submitted to the Monroe County Department of Human Services, which came to the conclusion that the $105,000 in payments that were made to Jonathan pursuant to the personal service agreement during the five-year look back period were uncompensated transfers. This resulted in a 13-month penalty period for which Warren would not be eligible for nursing home benefits.
The Appellate Division of the Fourth Department of the New York Supreme Court set aside the decision of the Monroe County Department of Human Services.
The court held that although evidence of services was not submitted with regard to the fair market value of the personal services rendered, “it is undisputed that services were actually rendered by Jonathan and his wife…[and] the Monroe County Department of Human Services determination that the transfers to Jonathan were uncompensated transfers is not supported by substantial evidence.” The court sent the matter back to Monroe County for a redetermination of Mr. Kerner’s eligibility. The Monroe County Department of Human Services will have to ascertain the fair market value of the personal services actually rendered to Mr. Kerner.
The Fourth Department covers the Rochester and Buffalo area of upstate New York. Hopefully, the First and Second Departments of the Appellate Division, which deal with the metropolitan New York are, will make similar decisions concerning personal service agreements for residents. Should you have any questions concerning elder law, please contact our office at 1-800-344-6431 or by email.