The Michigan Department of Human Services has had a policy for several years that any care provided by a family member must be given in accordance with stringent requirements, including a written, dated and notarized contract that provides for future services only, at fair market rates, physician approval of all services provided and DHS “verification” of the contract. Few family members go through or are even aware of these requirements and, as a result, when an elderly person later applies for Medicaid for nursing home care, any payments previously made to any family members for in-home care will be treated as divestment that will disqualify the elder from receiving Medicaid benefits. This often puts the elder in a desperate situation, as their funds have been exhausted, the caregiver likely gave up other employment opportunities to provide the care and needed the wages to live on and DHS won’t provide funds for the care until the wages are returned and spent down, or the penalty period expires. Now, a decision by the Michigan Court of Appeals appears to extend this oppressive and unfair policy to care provided by non-family members.
In Jensen v. Department of Human Services, an elderly person paid an unrelated caregiver $19,000 pursuant to an oral agreement for care services provided during the 10 month period prior to a nursing home admission. When the elder entered a nursing home and applied for Medicaid, DHS applied a divestment penalty to the payments to the caregiver. The elder’s grandson appealed the penalty to the Circuit Court, which reversed the penalty. The Michigan Court of Appeals, however, apparently confused the standard that applies to contracts for home maintenance with the standard that applies to contracts for care services by family members, and ruled that any contract for care giving services by any provider must meet DHS’ cumbersome standards. As a result, a standard that was intended to apply only to family members now applies to care given by a friend, neighbor, acquaintance and even a home health care agency. It is hard to imagine that DHS will apply a divestment penalty to services provided by a professional health care agency. Nonetheless, the legal authority to do so is now available. It’s not clear at this time whether the parties involved plan to appeal this decision to the Michigan Supreme Court
If an elderly client mentions that they are paying for in-home care, please make sure they are complying with these requirements. You may save them a lot of grief down the road.