The Other Valuable Consideration Rule

There are many children who have sacrificed greatly to give care to an elderly parent so that the parent can stay in the family home. Some have even given up their jobs to give that care. Besides that being a tremendous devotion to a loved parent, the federal and state law recognizes that keeping the elder parent at home may very well have saved the state and federal governments tens or hundreds of thousands of dollars because the parent did not have to enter a nursing home during that time.

Because of this, there is a law that allows children, and even non family members who give such extensive care, to receive compensation from the assets of the person receiving care. It is called the Other Valuable Consideration Rule and here is how it works. The caregiver must live and reside in the home where the elder person lives. That can be in the caregiver’s home, the parent’s home, or a rental apartment. The key is that the two must live together. The caretaker cannot live part time with the elder person and part time somewhere else.

The second part of the rule is that the caretaker gave the care, without which the elder person would have needed skilled nursing level care. In plain speak, that means the elder would have needed nursing home care if not for the services that the live in caretaker provided. A third part of the rule is that the care had to be given for at least a two year continuous period. That is a long time to devote to the 24 hour needs of another.

Under this rule, the elder person would be allowed to transfer an amount equal to the cost of care, which Connecticut currently says is $12,851 per month, times the number of months that care was given. Over 24 months or longer, that can be a very large amount. Also, it does not have to be immediate family members giving that care. It could be a more distant relative or even an unrelated person.

The Connecticut Department of Social Services is not going to approve someone for Medicaid who has done such a transfer of assets without good proof. There must be proof that the caretaker actually lived with the parent or other elder person. In addition there must be proof that the elder person needed such a great amount of care that it was necessary to avoid a nursing home. That kind of proof must come from a doctor or other health care professionals. The doctor’s medical records and the other health care professionals’ records who examined or provided services to the elder will be sent to a medical review team at the Department of Social Services. This team is composed of medical professionals who will review all the records and decide if the person would have needed a nursing home level of care if the 24 hour home care was not provided. Over the years the medical review team has been realistic and fair in making this determination.

Of course a critical part of the rule is that the care must have been continuous for at least two years, while the caregiver lived in the same dwelling. It does not work if the caregiver goes home or somewhere else to sleep every night. It also does not work if there was a gap in care of weeks or months at a time.

It has been a gratifying experience to see how many family members have given so much of themselves and be able to explain to them that there can be a reward for such selfless service, even if they were not looking for any compensation.

More often the time frame is less than two years, or the caregiver does not live with the elder, and in such cases it is important to have a written caregiver contract in place so that compensation can be paid to that devoted child if Medicaid is eventually needed. Such agreements cannot be back dated, must delineate the care to be provided, and be at a rate of compensation that does not exceed the going rate for the services given.

If your family is contemplating part time or full time care for mom or grandma, get competent advice on how the rules work and what needs to be done to satisfy them. If the rules aren’t satisfied, Medicaid may not cover future expenses if it becomes impossible to stay at home.