A North Carolina personal care contract lets a parent pay the family member who cares for them without NC Medicaid treating that pay as a gift, if the contract meets the state's conditions. This guide is for a parent paying an adult child or other relative for care: NC Medicaid looks back five years at transfers, and payments that miss the contract rules can count as transfers that bring a sanction period on institutional care.

In This Guide

Why the Look-Back Matters in North Carolina

Wanting to pay the person who gives up evenings and weekends to help Mom is fair. The worry is real: money that leaves her accounts can come back up if she ever needs Medicaid to pay for a nursing home.

In 2026, North Carolina Medicaid limits a single aged, blind or disabled applicant to $2,000 in countable reserve, and the county Department of Social Services (DSS) takes applications.

The state's transfer-of-assets manual, MA-2240, looks back five years (60 months) from the date your parent applies for Medicaid and either enters a nursing facility or requests the Community Alternatives Program (CAP) waiver or PACE, so the look-back reaches a CAP or PACE request as well as nursing-home care. A transfer for less than fair market value inside that window produces a sanction period: months when NC Medicaid won't pay for some services related to institutional care.,

A personal care contract is how the family shows the money bought real services at a fair price.

What a North Carolina Personal Care Contract Must Say for Medicaid

MA-2240 says a North Carolina personal services contract is not an asset transfer when the value of what your parent pays is at least equal to the value of the services and all of the following conditions are met. The manual adds that the agreed services may be provided by an agency, a private caregiver or a family member.

Condition What it means for your family
Written and signed first A written contract between your parent (or their spouse) and the caregiver is signed before services are delivered and payment made. Payments for care given before the contract was signed don't meet this condition.
Dated, and either side can end it The contract is dated, and either party is able to terminate it.
Signed by the right person Your parent or their spouse signs, or a representative legally authorized through a power of attorney, general guardianship or guardianship of the estate.
Not living in a nursing facility Your parent is not residing in a nursing facility or intermediate care facility for individuals with intellectual disabilities (ICF/IID) while receiving the services.
Physician's written recommendation At signing, a physician has recommended the services in writing, signed, as necessary to prevent your parent's (or spouse's) entry to a nursing facility or ICF/IID.
No companionship, visits or spiritual wellbeing The services may not include companionship, visits or spiritual wellbeing.
Contract spells out the services and the money The county verifies the agreement by reviewing the written contract, which must include the type, frequency and duration of the services and the amount your parent is transferring to the caregiver.

Value is the other half of the test: if your parent pays more than the services they can expect to receive under the contract are worth, MA-2240 counts the payment as a transfer for less than current market value.

If dementia or illness means your parent can no longer sign, MA-2240 lets a representative legally authorized through a power of attorney, general guardianship or guardianship of the estate sign instead. When that representative is also the paid caregiver, have an elder-law attorney review the contract before anyone signs.

Don't skip the physician letter: MA-2240 requires it when a North Carolina personal care contract is signed. Ask your parent's doctor for it before anyone signs, and keep a copy with the contract.

How Much to Pay a Family Caregiver

Overpaying backfires: the test compares what your parent transfers with the value of the services they can expect to receive under the contract, which matters most when a parent pays up front for care still to come.

The contract also has to be lived as written. Your parent must give the county a detailed statement from the caregiver of the amount and type of services received, and ending the contract or not receiving the services at the frequency and value it specifies counts as an uncompensated transfer.

As a starting point, home health and personal care aides in North Carolina earned a median $15.02 an hour in May 2025, a Bureau of Labor Statistics wage estimate. It is not a state-set rate; the right rate depends on the care actually given.

The pay is also taxable. If your parent controls how the work is done, you are generally a household employee, and at $3,000 or more in 2026 cash wages your parent generally withholds your 7.65% share of federal payroll taxes and pays a matching 7.65%. Wages your parent pays to their own spouse, or to their child under 21, are not counted as Social Security and Medicare wages. The national guide to a personal care agreement walks through the tax side.

How North Carolina Medicaid Figures a Penalty on a Personal Care Contract

Here is how the math works if your parent's payments count as a gift. NC Medicaid adds up the uncompensated value of every transfer in the look-back and divides it by the average monthly private nursing-facility rate as of the date of the application, institutionalization or request for CAP or PACE. MA-2240 (revised June 30, 2026) gives that rate as $11,904 a month as of January 1, 2025, and uses $384 as the average private daily rate for a partial month. Ask your county DSS which rate is in effect when your parent applies.

Two months without that coverage can land at the hardest moment, just as she needs a nursing home. The way to avoid it is a written contract, signed before any care is given or money is paid, that meets the conditions in the table above.

Can Mom Give the House to the Child Who Cared for Her?

Sometimes. North Carolina's Medicaid manual allows giving away the home without equivalent pay only to certain people. One is a natural, adopted or stepchild age 21 or over who lived in the home for at least two years immediately before the parent entered a nursing facility or requested CAP or PACE, and whose care let the parent live at home rather than in a nursing facility throughout those two years. The child must provide documentation both that they lived in the home during the two years and that they provided necessary care.

Federal Medicaid law backs the same exception: a parent is not made ineligible for transferring the home to a son or daughter who meets those conditions, as the State determines.

Whether the care qualified is North Carolina's call on the documentation you provide, not the family's, so deeding the house to a caregiver child is not automatically safe. Talk to an elder-law attorney before any deed is signed.

Mistakes That Turn Pay Into a Gift

What to Do Next

  1. See an elder-law attorney in North Carolina before anyone signs. Brevy is educational and not a law firm.
  2. Get the physician's written, signed recommendation, dated on or before the contract date.
  3. Write the type, frequency and duration of the services and the amount being paid into the contract, and keep a log and bank records of every payment. The county will ask for a detailed statement from the caregiver of the services actually received.
  4. If your parent may apply soon, call your county DSS, which takes Medicaid applications.

If your parent is a veteran or surviving spouse, VA Pension and its Aid and Attendance add-on use a separate 36-month look-back before VA receives the claim. Our guide to Aid and Attendance in North Carolina explains it.

Frequently Asked Questions

Does a North Carolina Medicaid transfer penalty affect only nursing-home care?

Not necessarily. North Carolina's MA-2240 says that when an applicant gives away or sells an asset for less than current market value, the applicant may be ineligible for NC Medicaid payment of institutional services or in-home health services and supplies.

Is a personal care contract the same as North Carolina Medicaid's personal care program?

No. A North Carolina personal care contract is a private agreement paid from your parent's own money. NC Medicaid Personal Care Services is a separate Medicaid program that helps with daily activities such as bathing and dressing. Our guide to Medicaid PCS and family caregivers in North Carolina explains it.

Can a penalty be undone after a transfer?

Sometimes. Under federal Medicaid law, North Carolina doesn't penalize a transfer to the extent everything given away for less than fair market value is returned. It also doesn't penalize one when you show the state your parent meant to transfer at fair market value or for other valuable consideration, or did it only for a reason other than qualifying for Medicaid. The state can also excuse a penalty when it decides denial would work an undue hardship.

Learn More

CaregiverHow to Get Paid as a Family Caregiver in North CarolinaHow to get paid to care for a family member in North Carolina in 2026: Coordinated Caregiving, CAP/DA and CAP/C consumer direction, VA programs and more. CaregiverPersonal Care Agreements: Paying a Family CaregiverA personal care agreement lets a family pay a relative for caregiving without the money counting as a gift under Medicaid's look-back. What to include and why. MedicaidNorth Carolina Medicaid Income and Asset LimitsNorth Carolina Medicaid income limits don't cap you out: it's a spend-down state. See the 2026 asset rules, the medical deductible, and spousal protections. MedicaidNorth Carolina Medicaid Estate RecoveryHow North Carolina Medicaid estate recovery works in 2026: probate-only reach, the cost-effectiveness test that waives small estates, plus family protections. CaregiverGet Paid to Care for Your Spouse in North CarolinaCan you get paid to care for your spouse in North Carolina? It depends on the program. What PCS, CAP/DA and the VA allow, and what to ask first. CaregiverCaregiver Programs in North CarolinaEvery caregiver program in North Carolina: Coordinated Caregiving paid stipends, CAP waiver respite, NFCSP grants, VA benefits, and taxes explained for 2026.

Find personalized help planning a family caregiver contract in North Carolina at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.

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