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Some NJ Medicaid caseworkers are
erroneously informing the public that Personal Service Contracts are
no longer allowed.
A Personal Service Contract (or Employment Agreement) is generally
utilized where a parent compensates a family member for their time,
effort, and energy in performing various tasks.
Such contracts are permitted provided the payment rendered is deemed
"reasonable" for the task performed. In preparing such contracts, a
ledger should be affixed whereby the "employee" lists:
a) the nature of service provided
b) date such service was provided
c) time spent (in minutes)
Compensation can be made, weekly, bi-monthly, monthly or even deferred
to a future date. Compensation should also be reported on an
individual's tax return.
Some Medicaid caseworkers have been known to state that the "new law"
precludes the use of Personal Service Contracts in long-term care
planning. The "new law" (i.e. the Deficit Reduction Act of 2005) makes
no such declaration.
Word of Advice: In calculating compensation for a given task
performed, bear in mind the following axiom:
"The Pig Principle": little pigs get fed, big pigs get slaughtered. |
