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What Is The Caregiver Child Exemption?

What is the Caregiver Child Exemption?

The Caregiver Child Exception to The Medicaid Look Back Period 

In General 

In general, to qualify for Medicaid an individual must have very limited assets.  There are certain assets that are not counted for Medicaid eligibility purposes, which may include the home the Medicaid Applicant was residing in, a car and personal property.  Even though the assets may not be counted initially for eligibility purposes, Medicaid can recover against the estate of a deceased individual who was receiving Medicaid for the amount Medicaid paid for care.

Additionally, transfers (gifts) of assets by a Medicaid Applicant are subject to a 5-year look back period.  Essentially, asset transfers for less than full value made within 60-months prior to the Applicant’s Medicaid Application are subject to a penalty period of Medicaid ineligibility.  The Applicant will need to private pay for nursing home care during the penalty period.

There are exceptions to this penalty period for some transfers.

Caregiver Child Exception

One exception is The Caregiver or Caretaker Child Exception.  This exception allows someone to transfer their home to their adult child without violating Medicaid’s lookback period on asset transfers. This exemption is very limited and to receive it a number of facts must be true.

  1. The caregiver must actually be a biological or adopted child of the applicant. This can be shown by a birth or adoption certificate.
  1. The caregiver child must have lived in the home with his or her parent for at least two years prior to the parent’s admittance to a nursing home or assisted living facility, and must still be living in the home when the transfer occurs. This can be documented by a drivers license, bills, or tax return.
  1. The adult child must have provided a level of care that prevented the senior from needing to relocate to an assisted living facility or nursing home. This can be documented by a doctor’s or home nurse’s letter which should state that: If not for the care provided by the child for the last two years, the elderly parent would have required institutionalization

For the Caregiver Child Exception to apply, the home must be transferred from the elderly parent to the caregiving child. Once transferred following the rules of this exception, the home is no longer subject to Medicaid recovery.

Note that there can be disadvantages to transferring the home.  Among the many issues that should be considered:

  • The Medicaid Applicant no longer owns the home and is no longer in control of it or proceeds from its sale.
  • There may be income tax issues, such as the senior losing property tax exemptions, or capital gains tax liability could result for the adult child in the event he or she sells the home.
  • There may be expenses related to caring for the home that the transferee may not be able to pay. 

This brief summary is meant to provide a simple explanation, in plain English, of the Caregiver or Caretaker Child Exemption to the Medicaid lookback period, and is not intended to provide legal advice.  This is not a complete description of all of the legal requirements of Medicaid or the Caregiver Child Exception.  Qualifying for this exemption, and weighing it’s pros and cons, is a complex matter and requires thoughtful consideration.  Please consult a qualified Elder Law lawyer for your Medicaid planning needs.

 

 

 

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