By Elder Care Attorney Rick Law. Founding Partner at the Estate, Asset and Retirement Tax Lawyers at Law ElderLaw in Aurora, IL. Just off of the I-88 tollway.
So, what is considered “Fair Market Value” in regards to a personal care agreement? The first thing a hearing officer or judge usually checks when evaluating a personal-care agreement is whether caregivers are being paid fair market value for their services. This is especially the case when the services are being performed by a family member.
While services performed by relatives are often presumed to be gratuitous, the State Medicaid Manual states that “relatives and family members legitimately can be paid for care they provide.
The State Medicaid Manual further explains that the Medicaid applicant is required to show that the funds transferred to the related caregiver and the services received were exchanged for fair market value.
“Fair market value” is defined by the State Medicaid Manual as “an estimate of the value of an asset, if sold at the prevailing price at the time it was actually transferred.” While that may sound simple enough, determining the prevailing price of eldercare services is not as easy as it sounds.
Just about everyone in the legal field, including hearing officers and judges, will have a different opinion as to how to determine the prevailing price for caregivers. There is no legal formula as to how to determine a fair market hourly wage, or even who should make that determination. AARP provides an estimate of how much home-health aides are paid in each state. In some states, this estimate might be sufficient to show that the transfers in question were made for fair market value.
However, some state Medicaid agencies pay their personal-care attendants a much lower hourly wage than private caregivers, and that may skew fair market value. Lawyers should create an evidentiary record as to how they determined a fair rate to be incorporated into the contract.
After establishing the fair market rate, your lawyer still may face questions about what services are included and, in the case of Alzheimer’s disease, how wages would change with intensified care responsibilities as the disease progresses. Another issue to consider when calculating the fair market rate is any formal training that the caregiver may have. For example, a child who is acting as her mother’s caregiver and who just happens to be a nurse may have a higher fair market rate than her sister, who is a lawyer.
Unfortunately, there is a great deal of uncertainty when it comes to determining fair market value.
Too many families needlessly lose everything they have. Don’t let that be you. If you need help paying the overwhelming cost of long term care, give our office a call at 800-310-3100. Your first consultation is absolutely free. We’ll let you know what steps you need to take, right now, to protect yourself and your family. Call now, because when you’re out of money, you’re out of options!
Rick L. Law, Attorney, Estate Planner for Retirees.
Rick was named the #1 Illinois elder law estate planning attorney by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law ElderLaw, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future. Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care. Call 800-310-3100 for your free consultation now!