Using Personal Services Contracts may be a Disservice to Your Client

Keeping your Crisis Medicaid client’s interest first is virtually impossible when using a Personal Services Contract (PSC) as the lead strategy! 

My name is Tony Turbeville, President, Platinum Benefit Services, Inc. My company has obtained more than 10,000 LTC Medicaid approvals to-date. Today, I am going to discuss the real problem of using Personal Services Contracts as the main strategy used in a Medicaid Planning Practice.

Over the years, I’ve talked to hundreds of attorneys that used Personal Services Contracts as their go to planning strategy. My question is always: WHY? There are much better ways to provide a superior result for your client.

Allow me to answer the why, based upon these many conversations.

Note: nothing that follows is intended to be critical and the listed reasons may or may not be applicable to you. 

Before I continue, consider the value in providing substantially different solutions than most of your competitors. Before this article is over I am going to offer you the opportunity to:

·        learn how to outsell your competition;

·        provide a much higher level of service to your customer with much, much, much less effort; and

·        do it while making more money.

You may be thinking “that sounds too good to be true”. Well, before you make that decision, let’s talk a little more about why many attorneys lead with Personal Services Contracts.

Do any of these sound familiar?

1.      They’re easy to understand.

2.      They’re easy to do.

3.      Most cases have a provider that can justify the needed hours.

4.      You don’t know a better way.

5.      You think the tax problem is the client’s.

6.      It is what everybody else does (they’ve been marketed by annuity companies and their agents without true regard to the clients best interest).

7.      You think you can’t charge enough to handle a more complicated strategy(s).

8.      You think the client wants it simple and easy.

9.      You think the client can’t understand more complex strategies.

10.  You abhor the administrative nightmare of a more complex strategy.

11.  You’re afraid your support staff will mess up a more complex strategy.

12.  You’re a one person practice and can’t handle a more complex case.

I’m sure there are more, but you get the idea. Please listen carefully. None of these are valid excuses for not doing the best job possible for your client! 99% of the time a PSC is not the best lead strategy! 

When you use a personal services contract for a client you subject them to the following potential risks:

1.      A tendency to overestimate the service hours (or reverse calculate the needed hours and simply use the needed result) actually being provided which could (though not likely) result in a Medicaid fraud accusation - an unnecessary risk. If this did happen to become a problem, the client is going to point their finger and say you told them it was o.k., whether it is true or not. I promise this will happen! This could result in a Florida Bar complaint and an investigation. Not good for you!

2.      A huge tax liability! Let’s look at the facts. This is unquestionably self-employment income in the year in which it is received. Let’s be gentle and assume the federal income tax blended rate is 20%. On top of that you have to tack on 7.65% for the employee and 7.65% for the employer portion of FICA. Total conservative tax liability of 35.3%. Now for the dirty little secret that we all know happens. Some attorneys look at the person providing the services and say: “You should report this income on your tax return. But, no one is issuing a 1099. Wink, Wink”. There are several problems with this. 

a.      If the client is caught by the IRS (again not likely but certainly possible), the pain to the client will be great. 

b.     The client is going to point at you and say that you implied it was o.k. regardless of what the client signs. This accusation, if made to the Florida Bar equals an investigation, which if they dig deep enough, will uncover other clients that admit that while you didn’t tell them to not report it, you implied it. If the Bar really dislikes you, this could go very bad places.

c.      This devalues your professionalism and devalues what you can charge because the client sees it as a pretty simple process and sees you as willing to cut corners.

d.     This encourages price shopping because any attorney can do a personal services contract. Why pay one attorney 8k when another will do it for 5k. How are you setting yourself apart? 

There are more potential problems, but this should be enough for you to realize that - if there is a better way, you should learn it.

Let us share more than 30 strategies proven effective in the state of Florida. These have been tried and proven successful – many of which pass assets on to the heirs TAX FREE and avoid Probate!

After learning these strategies, a Personal Services Contract will be your last resort rather than your lead strategy. Find out more by watching my 45 minute free Webinar.

You will learn how to:

·        Do a better job for the client;

·        feel better about yourself;

·        operate on the up and up;

·        command higher fees;

·        get more referrals;

·        build a solid Medicaid planning practice;

·        be able to quickly poke holes in your competitors plan; and

·        remove fees as the primary decision point. 

Finally, we will show you how to offload ALL of the administrative functions, including the application and dealing with DCF while still commanding a fee equal to or exceeding your current fee structure.

If you would like to begin the process of learning how to be a preeminent Medicaid planning attorney, reduce your work and increase your net fee income, click the link below to register for my Free Webinar : Add Medicaid Planning to Your Practice "Competently, Efficiently and Profitably"

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