It has long been the case in the State of Michigan that the state frowns upon payments to family caregivers.  The Department of Human Services (DHS) is the state agency that is responsible for administering Michigan's Medicaid program for nursing home care.  DHS policy provides that payments made to relatives who were providing care for their senior parents or another older relative are “divestments,” resulting in a period of ineligibility for Medicaid benefits, unless a written legal contract is in place and a set of legal procedures are followed.  You can read more about the proper use of care contracts when a family member is providing care in a previous blog I wrote by clicking here.

If a Medicaid-compliant care contract is not in place, DHS will consider any payments made to a family member who was providing care in the 5 years before applying for Medicaid to be a divestment.  In effect, DHS treats such payments like a gift.  A divestment results in a period of ineligibility for Medicaid, which means Medicaid will not pay the nursing home bill for that period of time.  This creates a problem because the nursing home can then evict the elder if the nursing home is not getting paid.

Unfortunately, it has recently come to light, that DHS is applying the same policy when payments are made to any care provider, not just relatives.  This means that if a professional home care company is hired to provide care, a divestment penalty will be applied for any payments made to the home care company unless the written Medicaid-compliant care contract is in place first.  This policy would also apply to payments made to anyone else who is providing care assistance to a senior, including geriatric care managers, social workers, and non-relatives providing care. 

Even worse, the DHS policy was recently affirmed by an administrative law judge in a case occurring in Muskegon County.  There, an older person paid in excess of $18,000 over the course of nine months to a non-relative caregiver for care monitoring services in the person's home.  Readers who are familiar with the cost of home care, know that that is not an unusual amount to pay for this type of care.  After the older person had to move to a nursing home and apply for Medicaid, DHS considered these payments to be a divestment because no Medicaid-compliant care contract was in place at the time the care services were provided and paid for.

The administrative law judge conducted a hearing and issued an opinion affirming DHS's determination that these payments to the caregiver constituted an $18,000+ divestment.  In the judge's opinion, she focused on the plain language of the Michigan's Medicaid policy, which states, among other requirements, that “services must be performed after a written legal contract/agreement has been executed between the client and provider” (emphasis added).  The judge wrote that the use of the word “provider” was significant in her decision that the state's policy applies to professional care providers and non-relative care providers too.  The judge indicated that if the state had meant to limit the requirement that there be a written care contract to the situation when relatives were being paid to provide care, the word “relative” would have been used in the quoted sentence above instead of “provider.”

It has been reported that this decision has been appealed to the circuit court for Muskegon County.  The problem is that a favorable circuit court decision will not be binding in other cases, so DHS can continue to apply this policy.  It will probably take litigation in the federal courts before a less punitive policy is put in place, but such litigation may take years after it is commenced.

It is a shame, and somewhat bizarre, that the State of Michigan would have a policy penalizing seniors who hire home care companies and other professionals to provide home care.  After all, by paying such professionals, the elders are able to stay out of nursing homes longer, which may avoid or at least delay them having to rely on government benefits.

In the meantime, what should people who are considering hiring a professional home care company, nurse, social worker, or non-relativecaregiver do?  The safest course of action is to make sure a proper Medicaid-compliant care contract is in place.  This may  result in having to pay legal fees to an elder care attorney.  However, we know from counseling our clients in the past that providing Medicaid-compliant care contracts when a family member is providing care work.  As such, by having such a Medicaid-compliant care contract in place before payments are made for care, if the elder later has to apply for Medicaid, you will not have to worry about DHS determining such payments were a divestment, resulting in a period of ineligibility for Medicaid benefits, and then having no way to pay the nursing home for that period of time.