Personal Care Contracts: A valuable tool for an aging population.

Personal Care Contracts: What are They and What Do They Do?

Watching as a loved one becomes sick is never easy, but knowing how your family member will be cared for can be a huge relief in those stressful times. Such assurances can be found in Personal Care Contracts, which allow for families to create a plan for providing care to their loved one. Personal Care Contracts, at their core, are agreements between family members, usually the caregiver and care recipient, that outline the duties of the caregiver, such as assisting with daily activities, personal care, transportation, or companionship, and compensation for performing those duties. It is important to remember that Personal Care Agreements are prospective and not retrospective. This means that only future care giving services may be considered under the agreement, and payment cannot be made for services already rendered.

 Clarify Expectations

A well-drafted contract ensures that both parties understand their roles and responsibilities, minimizing potential conflicts and misunderstandings.

Perhaps the most important expectation that is clarified in a PCC is that of compensation for the caregiver. Having a PCC in place can save the family members from having disputes related to payment for the care giver, and instead everything is controlled by a contract that clearly outlines each parties duties and expectancies under the contract.

The agreement should include: Services to be provided, frequency of services, payrate and frequency of payment, start date/length of agreement, modification/termination clause, signatures.

Protect Assets

In Missouri, the funds paid to a caregiver under the PCC are not considered gifts. This is a crucial factor when applying for Medicaid. When there is not a PCC in place, however, funds paid to the care giver, even if only for services rendered by the caregiver, may be seen as gifts, and can have an adverse impact on Medicaid eligibility. With the PCC in place, the care giver is seen as the employee, whereas the care receiver is the employer. The two have a valid employment agreement, thus ensuring all funds received are seen as payments, as opposed to gifts.

Compensation for Caregivers.

Caregivers oftentimes give up personal opportunities to put the needs of their loved one first. A Personal Care Contract ensures that they will be paid for their efforts. Because every person’s situation differs, the Personal Care Contract can be altered to fit your family’s needs. By having the ability to tailor the Personal Care Contract to the needs of your family, you can create a plan that will ensure your loved one remains in good health, while also ensuring that it is being done in a cost-effective way. A common way that Personal Care Contracts can be tailored is to add a clause allowing for compensation in the event the care-giver must forego employment, or loses out on some other benefit because of their obligations as caregiver. Such a clause can financially protect the care giver, so that their attention can be on the care receiver, while also not overcompensating the individual, while also making the situation more palatable for the care receiver. Whatever you may choose to do, Personal Care Contracts are able to be tailored to the needs of your family in your situation.

Tax Implications

 When you have a PCC in place, both the care giver and care recipient can easily comply with any tax reporting requirements. This can save valuable time and money come tax season.

What to Include in Your Personal Care Contract

Now that we have discussed what a Personal Care Contract is, it is a good time to explain some key considerations and required elements to keep in mind when it comes time to draft your document.

 Contract in Writing

The first consideration is that this is a contract, and therefore the best practice is to put the agreement down in writing. Having the agreement in writing will allow for the parties’ obligations to be clearly laid out, while also ensuring the validity of your contract. By having a valid contract in place and in writing, it will be harder for anyone to later challenge the validity of the contract

Parties to the Agreement

Next, you must include the parties to the agreement – the care giver and care receiver. Including these parties in the contract is required, and failure to include the parties may void the contract entirely. In addition to naming the parties, you should also include the parties’ contact information.

Scope of the Contract

Next, it is important to identify what exactly is being agreed to in the contract. This can be labelled as the “scope of the contract” and will discuss each parties’ duties to one another. This is where you can decide the types of care to be given, when the care is given, and the extent of the responsibility imposed upon the care giver. By adequately setting out the responsibilities of the parties, there is more trust and less confusion throughout the process.

Compensation

The next item to be included, and perhaps one of the more important elements for the care givers, is that of compensation. By laying out compensation early in the process, the care giver can rest assured that their hard work will not go without financial recognition. By having compensation in place, care givers will be more likely to provide the care necessary, as they can give their undivided attention to the matter without worrying how they will take care of themselves.

Contract Duration, Modification, and Termination

Next, it is important to clarify the duration of the contract. Personal Care Contracts may typically be in place for the remainder of the care receiver’s life; however, situations differ and a different duration may be used. Some important dates to include will be the start and end dates. Another important aspect that may be included is how the contract can be modified or terminated. Here is where you can set out contingency plans for if the care receiver no longer needs care, if the care giver is no longer willing to provide care, and so on.

Signed by Both Parties

Finally, to ensure that the Personal Care Contract complies with the Statute of Frauds and other contractual requirements, the contract will need to be signed by both parties. By signing the document, you are agreeing to be bound by the terms of the contract, finalizing the Personal Care Contract.

Consult with an Experienced Attorney

While there is no requirement that an attorney must draft, or even be a part of the creation of a personal care contract, it is important to consult an experienced attorney to help you adhere to Missouri law, and make the process as simple as possible for you.