Payment for Services to an Attorney-in-Fact 510-05-80-37

(New 10/1/14 ML #3420)

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(N.D.A.C. Sections 75-02-02.1-43)

 

When an individual makes a payment to their Attorney-in-Fact for services or assistance furnished to the individual by the Attorney in Fact, the services or assistance furnished may not be treated as consideration for transferred income or assets, unless:

  1. There is a valid written contract:
    1. Entered between the individual and the Attorney in Fact prior to the Attorney in Fact rendering the services, and payment is made pursuant to the valid written contract; and
    1. The contract was executed by the individual or the individual's Attorney in Fact who is not a provider of services or assistance under the contract; and

Example: It is acceptable for a Medicaid recipient’s Attorney in Fact to sign the contract to have a third party provide the services.

Example: It is not acceptable for a Medicaid recipient’s Attorney in Fact to sign the contract to have the Attorney in Fact provide the services.

Example: It is acceptable for a competent Medicaid recipient to sign the contract to have the Attorney in Fact provide the services.

  1. Compensation is reasonable and consistent with rates paid in the open market for the services actually provided; and
  1. The services are necessary and reasonable, or

Example: Mary has had Power of Attorney for both her parents for the past 3 years. Her parents’ health has been steadily deteriorating over the past two years. Mary’s Mother has always told her children she never wants to go to a nursing facility, so Mary, as outlined in the Power of Attorney agreement, provides round the clock nursing care for her parents for $2000 per month including her room and board. The worker has verified that both parents need a nursing home level of care and has needed it for at least the past year. Now, Mary’s Father has fallen and it is just too much for Mary to care for both parents, so they are applying for nursing care for Mary’s Father. We would consider the $2000 per month plus room and board payments to be reasonable. If the parents had gone directly to long term care, it would have cost them in excess of $14,000 per month. If they’d have hired a private nurse, it would have cost approximately $9,000 month.

Reasonableness is dependent upon the type of service provided, whether the service is necessary, the size and scope of the services and what the going rate is in the community for such services.

Example: John has held a Power of Attorney for his father for the past 3 years. John’s Dad lost his eyesight and the largest part of his Power of Attorney duties was to pay bills once per month. The agreement had a stated value for these services of $500 per month. John’s Dad at this time had minimal assets, and expenses. Most bills were set up as automatic withdrawals from his bank account. John usually spends 1 hour per month paying his Dad’s bills. $500 per hour for writing checks is not reasonable. If Dad, for example would have several pieces of property in which he had a life estate interest, and was collecting rents, and John was spending 30 – 50 hours per month doing this, it would be reasonable.

  1. If there is not a written contract, the prior course of dealings between the individual and Attorney in Fact included the individual paying compensation upon rendering services or assistance, or within 30 days thereafter.

Example: Deb is a ‘snowbird’ who winters in New Mexico 5 months of the year. There is a history of Deb paying Tim to manage her properties while she is in New Mexico during those months. Deb has been fully capable, so Tim does not conduct everything for her, just intermittently. In such a case, a written contract would not be required as there is an established history of payments made for services. We would require verification of past payments made and for which services.

Reasonable payments are allowed as a spend down of assets but not as a deduction from income.