Caregiver Agreement for Medicaid Planning in New York

Why a Written Agreement Matters

When an adult child provides daily care for an aging parent — helping with bathing, meals, medication management, transportation to medical appointments — and the parent compensates them from their own funds, that payment can look like a gift to Medicaid. If the parent later applies for Nursing Home Medicaid (which has a strict 60-month lookback period), every uncompensated transfer during the lookback window triggers a penalty period during which Medicaid will not pay for care.

A properly structured caregiver agreement converts those payments from "gifts" into fair market value compensation for services rendered. The money is no longer a transfer — it is payment for work performed under a binding contract. This is a legitimate, well-established Medicaid planning strategy in New York, but the agreement must meet specific requirements to survive scrutiny.

Community Medicaid for home care currently has no active lookback period in New York (the 30-month lookback authorized in 2020 remains unimplemented as of mid-2026). But if a parent transitions from home care to a nursing home within five years, those community-era payments will be examined under the institutional lookback. Getting the agreement right from the beginning protects the family regardless of where care eventually occurs.

What the Agreement Must Include

A Medicaid-compliant caregiver agreement in New York should contain:

Parties and effective date: Full legal names of the parent (the "care recipient") and the caregiver. For future services, sign the agreement before care begins. If care has already been provided, have an elder-law attorney review the arrangement before attempting to characterize past payments for Medicaid purposes.

Specific services: List every task the caregiver will perform. Vague language like "general care" is insufficient. Enumerate the ADL assistance (bathing, dressing, grooming, transfers), IADL tasks (cooking, grocery shopping, laundry, medication management, bill paying, transportation), and any supervisory duties (monitoring for falls, managing wandering behavior, overnight presence).

Schedule and hours: Specify the days and hours of care. If the caregiver provides 40 hours per week, say so. If the schedule varies, describe the typical weekly commitment and note that hours may fluctuate based on the care recipient's needs.

Compensation rate: The hourly rate must reflect fair market value for comparable services in the parent's geographic area. In New York, private-duty home care aide rates range from $25 to $35 per hour depending on the region. Setting the rate significantly above market — $50 per hour for basic personal care — raises red flags. Document the market comparison supporting the rate you choose.

Payment terms: Specify how and when payment occurs (weekly, biweekly, monthly) and the method (check, direct deposit). Never pay in cash — there must be a paper trail showing the payment amount, date, and recipient for every disbursement.

Duration and termination: State the agreement's term and the conditions under which either party can terminate it. Include provisions for what happens if the parent enters a hospital, rehabilitation facility, or nursing home temporarily.

Keeping Records That Survive a Medicaid Audit

The agreement itself is step one. The ongoing documentation is what actually protects the family:

• Care logs: The caregiver should maintain a daily log of tasks performed and hours worked. A simple spreadsheet noting the date, start time, end time, and tasks is sufficient. This is the evidence that services were actually rendered.
• Payment records: Bank statements showing regular payments from the parent's account to the caregiver, matching the agreement's compensation terms. If paying by check, keep copies of every check.
• Tax reporting: The caregiver should report the income on their tax return. Unreported caregiver income undermines the argument that the arrangement was an arms-length employment relationship.

Sibling Dynamics and the Agreement

Caregiver agreements often surface existing sibling tensions. The caregiving sibling is being compensated from the parent's assets — assets that other siblings may view as their inheritance. Addressing this directly in the agreement, or in a separate family communication, prevents conflicts from escalating into guardianship disputes or accusations of financial exploitation.

Some families hold a meeting where all siblings review the agreement, the compensation rate, and the care schedule. Transparency about the rate, the market comparison, and the care logs reduces suspicion. If one sibling is providing daily hands-on care and another lives across the country, the agreement formalizes what is already happening — the local sibling is working, and the parent's funds are paying for that work at a fair rate.

What the Agreement Does Not Replace

A caregiver agreement is not a Power of Attorney. It does not give the caregiver authority to manage the parent's finances, make medical decisions, or sign legal documents on their behalf. Those authorities require a separate Statutory Short Form Power of Attorney (with Medicaid-specific gifting modifications under the June 2021 rules) and a Health Care Proxy.

The agreement also does not replace the CDPAP pathway. If the parent qualifies for Medicaid home care, enrolling in CDPAP and designating the family member as the personal assistant is a parallel strategy — CDPAP pays the caregiver through Medicaid funds rather than the parent's personal assets. The two approaches can coexist: a caregiver agreement can cover hours or services not authorized under the CDPAP plan.

The Aging in Place in New York guide includes a caregiver agreement framework with the specific provisions New York Medicaid expects to see, along with a care log template and the full CDPAP registration process for families who want both private-pay and Medicaid-funded caregiver compensation.

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