Personal Service Agreements

Adult children or family members who live near their
aging relatives often act as care-givers and/or providers of personal services. Some of the services they tend to provide include:

• providing transportation to and from doctors appointments;
• aiding in daily care;
• paying bills and managing households;
• running errands;
• arranging social time with friends;
• communicating with medical and other types of professionals; and
• coordinating and communicating with other family members.

These care-givers/providers generally expend a great deal of time and energy performing these tasks, often to the exclusion of gainful employment, their immediate family’s needs and their own independence. The law recognizes the value of these services to the caregiver/ provider, the aging relative who is enabled to remain in the community longer and to Medicaid which expends less money as a result.

In such situations, Elder Law Associates PA often recommends that the aging relative and the care-giver/provider enter into a special contract, called a Personal Service Agreement, which we draft for our clients. Through a properly negotiated and executed Personal Service Agreement, care-givers/providers are compensated for their time by the aging relative they assist. The payment for the services may either be lump sum or periodic. The payments are considered income to the care-giver/provider and must be reported as such on annual tax returns.

Time is of the essence as payment for past services is not permitted. The payment pursuant to a Personal Service Agreement is a transfer for compensated value and does not result in a penalty period if and when the aging relative applies for Medicaid.