Family Caregiver Agreement Pennsylvania

Why a Written Agreement Matters for Medicaid

When a family member provides care to a parent with dementia and receives payment for that care, Pennsylvania Medicaid will scrutinize every dollar during the 60-month lookback period. Without a properly structured written agreement in place before payments begin, the Department of Human Services can classify those payments as uncompensated transfers — gifts that trigger a penalty period during which Medicaid won't pay for care.

The penalty math is severe. Pennsylvania's 2026 transfer penalty divisor is $421.20 per day. If you paid your daughter $40,000 over two years for caregiving without a written agreement, that entire amount could be treated as a gift, creating roughly 95 days of Medicaid ineligibility — more than three months of nursing facility costs that the family must cover out of pocket.

A family caregiver agreement (sometimes called a personal care agreement or caregiver contract) establishes that the payments were legitimate compensation for services rendered, not gifts to avoid Medicaid asset limits.

What the Agreement Must Include

Pennsylvania doesn't publish a specific template, but Medicaid auditors and elder law attorneys follow consistent standards for what makes an agreement enforceable:

Parties and effective date. Name the care recipient (your parent) and the caregiver (the family member providing services). The agreement must be signed and dated before any payments are made — backdated agreements are routinely rejected during Medicaid applications.

Specific services covered. List exactly what care the family member will provide: bathing assistance, medication management, meal preparation, transportation to medical appointments, supervision for wandering risk, behavioral redirection, housekeeping related to the care recipient's needs. Vague language like "general assistance" invites challenge.

Hours and schedule. Document expected hours per week or month. This creates the basis for calculating whether the payment rate is reasonable. If your mother needs 30 hours of personal care per week and you're paying your sister $15 per hour, that's $1,800 per month — defensible against the going rate for home care aides in Pennsylvania.

Compensation rate. The hourly or weekly rate must be at or below the fair market rate for comparable services in your Pennsylvania county. Community HealthChoices pays family caregivers under the Services My Way model between $13 and $18 per hour depending on region. Private home care agencies in Pennsylvania typically charge $25 to $35 per hour (the caregiver receives less; the agency takes a margin). Paying a family member $15 to $20 per hour for personal care is generally within the defensible range.

Payment method. Pay by check or bank transfer — never cash. You need a paper trail that matches the agreement. Monthly payments on a consistent schedule look more legitimate than irregular lump sums.

Term and termination. State when the agreement starts and under what circumstances it ends (care recipient moves to a facility, care recipient passes away, caregiver can no longer provide services).

Who Can and Can't Be a Paid Caregiver

Community HealthChoices — Pennsylvania's Medicaid managed-care program — allows adult children and other family members to be hired and paid through the participant-directed Services My Way model at $13 to $18 per hour. However, spouses and legally appointed guardians face strict limitations and are generally barred from receiving direct compensation as paid caregivers.

For private caregiver agreements (outside of Medicaid programs), there's no blanket prohibition on who can serve as the paid caregiver. But the closer the family relationship, the more documentation you need. A son being paid $18 per hour to provide 20 hours per week of documented personal care is defensible. A son being paid $3,000 per month with no time records and no description of services is a Medicaid audit problem.

Documentation During the Caregiving Period

The agreement alone isn't enough. You need contemporaneous records that prove the services were actually delivered:

Keep a daily or weekly log of hours worked and specific tasks performed. Even a simple spreadsheet with dates, times, and a one-line description of activities is sufficient.

Save all payment records — bank statements showing the transfers, canceled checks, or payment app receipts.

Document your parent's care needs with medical records. A physician's letter stating that your parent requires assistance with specific activities of daily living due to their dementia diagnosis strengthens the case that paid caregiving was medically necessary.

If your parent's condition changes — they need more hours, they develop new behavioral symptoms, they require nighttime supervision — update the agreement in writing and adjust the care log accordingly.

When to Involve an Attorney

For straightforward arrangements (one family caregiver, a parent with clear care needs, payments within market rates), many families successfully draft their own agreements. The key is doing it correctly from the start and maintaining records throughout.

If your parent's estate is large enough that Medicaid planning involves trusts, real estate transfers, or complex asset restructuring, an elder law attorney should review the caregiver agreement as part of the broader plan. The agreement needs to be consistent with the overall strategy.

Our Pennsylvania Dementia & Memory Care Guide includes a family caregiver agreement template with the specific provisions Pennsylvania Medicaid auditors look for, plus a care documentation log and a rate comparison chart by region.

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