What Is a Personal Care Contract?

A personal care contract, also called a caregiver agreement, is a type of personal services arrangement in the health care industry. Caregivers are engaged to provide specific services to medically-challenged or elderly individuals, typically at home, in exchange for money. These sorts of agreements can be oral, though written agreements are preferred for a number of reasons. Most often, the person receiving the services is elderly, and a written agreement is the easiest way to prove that the exchange of money for services was initiated without undue influence or duress.

Often, the elderly or those who have health-related difficulties may want to remain in their homes, rather than incur the expense and inconvenience of living in a managed care facility. This is particularly true with the elderly, who may not be capable of meeting their own daily living needs at home without help. Caregivers provide a range of services under this type of contract, from household cleaning and grocery shopping to running errands and providing personal grooming.

Virtually anyone can be a caregiver under a personal care contract. The caregiver can be a professional, such as a nurse or home attendant, or a family member. When the caregiver is a family member, the existence of a written personal care contract can support any compensation arrangement that may exist in exchange for the help. For example, an elderly parent might make lump sum payments or leave more of his estate to the child who agrees to provide for his care. In the event of a dispute between siblings regarding the legitimacy of the transference of assets, a written personal care contract can go a long way toward establishing the intent of the parties.

There are a number of benefits to implementing a written contract for personal care, even if the arrangement is between family members. Placing the terms in writing creates a formal expense that reduces the service recipient's assets. For an elderly person, this expense can enable him to qualify for government benefits that have an income cap, such as the Medicaid program in the U.S. Once the arrangement is formalized under a personal care contract, however, the caregiver might be considered an employee. In that case, both parties are liable for employment taxes.

A proper personal care contract should be put in writing before the arrangement commences. The document should define the caregiver's scope of services and specifically detail the compensation package. Method and frequency of payment should be addressed, in addition to indicating who will be responsible for paying employment taxes. Most importantly, the agreement should indicate when and how the arrangement will terminate and under what circumstances the agreement can be canceled by either party.