Personal Services Contracts in Medicaid Planning

Scott Solkoff presented personal services contracts—also called family caregiver or personal care agreements—as a potential Medicaid-planning strategy for compensating a loved one for genuine future services.

• Purpose: converting an informal caregiving relationship into an enforceable agreement covering advocacy, monitoring, transportation, care coordination, and other services.
• Fair-market value: the agreement must document a real exchange of equivalent value rather than a disguised gift.
• Prospective services: compensation should be based on future obligations established before payment, not retroactive payment for past care.
• Valuation: reasonable hourly rates, anticipated services, life expectancy, and local professional-care rates should support the calculation.
• Documentation: the agreement, proof of payment, valuation methodology, authority documents, service descriptions, and market evidence should be maintained.
• Control of funds: compensation must belong to the caregiver without a side agreement requiring the money to be held or spent for the applicant.
• Capacity and ethics: counsel must review decision-making authority, self-dealing provisions, conflicts, and the identity of the client.
• Tax consequences: payment may be taxable compensation to the caregiver and should be reviewed with a qualified tax adviser.

The session stressed that careful drafting and persuasive evidence are essential because Maryland and D.C. do not provide a simple safe-harbor rule for these agreements.