May 23, 2023

Personal care agreements for seniors and their loved ones

Manny Cominsky

Each year, tens of millions of adults act as caregivers for seniors aged 65 and above. This care comes in a variety of forms like helping seniors manage healthcare appointments, helping seniors prepare meals, conducting home maintenance or other projects to make the senior’s home more senior friendly, and helping seniors manage their finances and pay their bills. Despite the fact that so many adults are providing so much care to their senior friends and loved ones each year, many adults do so either in a fashion that is either uncompensated or only informally compensated. If you are providing senior care for a senior friend or loved one, formalizing the relationship in a personal care agreement can have important benefits both for you and the senior. 

First, many people simply don’t realize that they can be paid for their time providing care for a senior loved one, whether that comes in the form of the senior paying the individual directly or an insurance or government program paying them for the care that they provide. This can be incredibly helpful for the senior as oftentimes it will allow a family member to reduce the amount they work in another job (because they can be paid to provide care), which allows the senior to receive the care that they need. In addition, making sure that senior care is provided pursuant to a personal care agreement can help ensure that the senior’s care payments are properly categorized as care payments and not a gift, and so do not disqualify the senior from Medicaid coverage because they have violated Medicaid’s look-back period.

To learn more about personal care agreements and how they can help seniors and their loved ones, read more in our guide below or reach out to the Sunbound team to get more information.

Personal Care Agreements Overview

A personal care agreement, sometimes known by other names like family caregiver contracts, elder care contracts, or long-term care agreements, are written contracts between a caregiver and the person for whom they are providing care. Oftentimes in the context of senior care, these contracts are between a senior who is receiving care, and their family member or close personal friend who is providing the care (although it is not required for this relationship to exist, and often the caregiver is an unrelated third party).

A personal care agreement is important for several reasons. First, by establishing a clear employer-employee relationship between a senior and their caregiver, a personal care agreement can help protect both parties to the contract by establishing clear guidelines around what the caregiver’s duties are, how much they are expected to work, and what their rate of compensation will be (among other important factors). 

While some people may think it’s over-the-top to draft a contract defining how they will be taking care of a senior loved one, we’ve found in our experience that clear expectation setting between seniors and their loved ones can help make sure that neither party is surprised or disappointed by the nature of the care that is provided. Given that caring for a senior loved one can often represent a significant commitment of someone’s time and finances, it’s a best practice to make sure that both parties are on the same page about what this commitment means. 

Along with protecting both the caregiver and the senior care recipient, a personal care agreement has a second important benefit (described in further detail below) which is that it can help protect seniors applying for Medicaid from violating their state’s Medicaid look-back period and therefore being deemed ineligible for Medicaid.   

How to Create a Personal Care Agreement

As with drafting any contract related to senior care, our first suggestion is always going to be to consult a local elder lawyer who has expertise in helping families and their senior loved ones put together personal care agreements. While it is not a legal requirement to have an elder law attorney draft your personal care agreement, a local elder law attorney will not only know all the required steps to draft a valid personal care agreement, they will also be able to advise you and your senior loved one on how to handle all the trickiest and hard to discuss aspects of personal care agreements, such as the caregiver’s rate of pay or the scope of their responsibilities. 

So what are some of these requirements for a valid personal care agreement? First, and this is something a local lawyer can help you with, make sure that your state does not have any specific requirements regarding personal care agreements such as barring lump sum payments. Also related to payments, make sure that the personal care agreement pays the caregiver for future care services, as personal care agreements are not designed to pay a caregiver retroactively for care services that have already been provided. In addition, the caregiver’s payment must be reasonable which means that it is roughly in line with what other caregivers are receiving for providing similar senior care services in the local area.

In addition to these requirements around payments there are some other things that a caregiver agreement will need. First, the agreement should describe all the tasks that will be provided by the caregiver, where they will be provided, as well as the frequency of the services and when they are expected to start (and if relevant, when they are expected to stop). Additionally, most states require that the personal care agreement be signed by both the senior and their caregiver, and also that the agreement is notarized. 

Personal Care Agreements and Medicaid

As noted above, one of the most important reasons to sign a personal caregiver agreement is to protect the senior from Medicaid’s look-back period should they decide to apply for Medicaid. As we’ve covered before, in order to be eligible for Medicaid a senior can only have a limited number of assets. This number will depend on such factors on whether the senior is married and, if so, if their spouse is also applying for Medicaid coverage. State Medicaid agencies will look through all of the senior’s transactions for a period of time before their application in order to make sure that the senior did not simply give away their assets in order to bring their assets below the Medicaid eligibility threshold. 

If a senior is paying for care services without the existence of a personal care agreement, there is a high chance that Medicaid will deem these payments as a gift to their caregiver and therefore in violation of the Medicaid look-back period rules. If, on the other hand, the senior has been paying for their care pursuant to a signed contract with their caregiver (and their caregiver has been keeping a proper log of all the payments and services rendered) then the senior will have a far easier time proving to Medicaid that these payments are legitimate costs incurred for their care, and not gifts made to get under Medicaid’s asset limits. This makes it incredibly likely that a state Medicaid agency will not determine that these payments violate the look-back period rules, and therefore won’t result in the senior being deemed ineligible for Medicaid.

To learn more about how Sunbound can help make senior living more affordable for you or your loved one, send us an email at or request more information on Sunbound. Sunbound is the best way to pay for senior living and is on a mission to make senior living affordable for everyone.

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