Reviewed by Letha Sgritta McDowellLetha Sgritta McDowell is an attorney practicing in both Virginia and North Carolina. She is a fellow of the American College of Trusts and Estates Council, a certified elder law attorney, and a past president of the National Academy of Elder Law Attorneys.

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Paying for long-term care using Medicaid can get complicated, especially if a senior owns their home. While a senior’s home is not usually considered a countable asset when qualifying for Medicaid, it may be claimed by Medicaid after the senior dies to recoup funds used to pay for their care. However, the Medicaid caregiver child exemption, which may also be referred to as the child caregiver exception, can help seniors gift their home to a child who acted as their caregiver.

Key Takeaways

There are strict rules around transferring assets to qualify for Medicaid. The Medicaid caregiver child exemption allows a parent to gift their home to an adult child who acted as their caregiver.
States may have different rules around qualifying for and claiming the exemption. It’s advisable to seek legal advice when planning to use the exemption.
A child must prove they resided with their parent and provided care for at least two years. This may include providing documents such as a driver’s license and verified documentation of the care that was provided.
When claiming the caregiver exemption, a child must provide documentation of the home transfer. This may include a signed deed or mortgage papers and proof of the parent/child relationship, such as a birth certificate.

What is the Medicaid caregiver child exemption?

The caregiver child exemption allows a senior homeowner who applies for Medicaid to gift their home to an adult child who acted as their caregiver without incurring a penalty period of ineligibility. Specific rules are set by individual states, but understanding Medicaid’s basic eligibility requirements will help you to better understand the caregiver child exemption.

Qualifying for Medicaid

Medicaid is funded by the federal government and administered by individual states. States must adhere to federal guidelines but are given autonomy to create and manage their own programs. As a result, Medicaid coverage and eligibility requirements vary from state to state.

When it comes to financial eligibility for long-term care coverage, Medicaid doesn’t just look at a senior’s income and assets on the date of their application. All of their financial transactions made within the five years immediately preceding their application are under scrutiny. This five-year window is called the look-back period.Medicaid reviews a senior’s finances during this time and flags gifts or assets that were transferred for less than fair market value. Gifting is not a valid Medicaid planning strategy and will result in a period of ineligibility for Medicaid coverage.

Medicaid estate recovery

The federal government requires that states attempt to seek reimbursement for certain expenses, such as long-term care costs, after a Medicaid beneficiary dies. One way states do this is by placing a lien or filing a claim against a late beneficiary’s estate. This is known as Medicaid estate recovery. Depending on the state’s Medicaid policy, this may include the forced sale of a home in order to pay the claim.^[01]

Qualifying for the Medicaid caregiver child exemption is one way of protecting a senior’s home from the Medicaid estate recovery program.

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Qualifying for the caregiver child exemption

Families may plan for Medicaid eligibility by using their loved one’s assets to pay for their care or by employing certain asset protection strategies. Families need to be aware that transferring assets, such as a home, for less than fair market value could result in penalties and a period of Medicaid ineligibility.

However, the caregiver child exemption allows a senior parent to bypass this rule. A parent can transfer the title of their home to an adult child when they need to move into a Medicaid-funded nursing home as long as the following requirements are met:

The adult child is at least 21.
The child must have lived in the parent’s home for at least two years immediately prior to the parent requiring care in a nursing home facility.
The child must have provided care in their parent’s home that helped delay the parent’s move to a nursing home.

Because spend-down rules and the child caregiver exemption requirements differ in each state, it’s best to consult with an elder law attorney to help you and your family avoid costly Medicaid-planning mistakes.

Read related article:Medicaid Specialist vs. Elder Law Attorney

Providing proof of residence with your parent

Many states require proof that you resided with your parent prior to their moving to a nursing home in order to claim the exemption.

Examples of documents you can use to prove residency in your parent’s home include:

Tax returns
Driver’s license
Bills addressed to you at your parent’s address
Auto insurance documents

Providing care

In many states, you must show that your parent required a nursing home level of care but was able to delay moving to a care facility as a result of the care you provided. You should be prepared to provide documentation and/or records to justify your parent’s care needs, which may include:

A signed statement from your parent’s doctor expressing your parent’s need for a nursing home level of care
Medical records documenting your loved one’s diagnosis or health conditions
Your own records and documentation of caregiving duties
Statements from witnesses declaring they observed you providing care to your parent

An adult child living with their parent will typically provide companionship and support with activities of daily living such as:

Dressing
Eating
Bathing
Transferring
Toileting
Continence care ^[03]

Benefits of the Medicaid caregiver child exemption

Benefits can be both personal and practical for a family. For example, ths exemption may allow your parent to remain in their own home while receiving the care and companionship they need from someone they know and trust.

The exemption also allows a parent to leave a legacy through the gift of their home to an adult child, while remaining eligible for Medicaid should their care needs change. This arrangement also ensures the caregiving child has a place to live once the parent moves into a nursing home and after they pass away.

Is the Medicaid caregiver child exemption right for your family?

Caring for a loved one alone can be challenging, but living with a parent while caregiving can create an entirely new relationship dynamic. In addition, qualifying for the caregiver exemption requires that the caregiver reside with their parent for a minimum of two years. Consider the following questions to help you decide if it’s the best option for both you and your parent:

Does my parent want me to be their live-in caregiver?
How will my lifestyle be affected?
Can I commit to living with my parent for two years?
Do I want to inherit my parent’s home?
Can I can provide the level of care my parent needs now?
Am I willing and able to meet their care needs as they increase?
Does, or will, my parent’s home require modifications to meet their needs?
Will my parent receive better care in a senior living community?

If you and your parent mutually agree that you acting as their live-in caregiver is the best option, consider hiring an elder law attorney. They can provide legal guidance for your family’s unique arrangement and state-specific information regarding the Medicaid caregiver child exemption.

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Tips for claiming the child caregiver exemption

After your parent has moved to a nursing home, there are several documents you may need to submit along with their application for Medicaid in order to claim the caregiver child exemption. Procedures and requirements can vary by state, but documentation you may be asked to provide could include:

Invoices or other documents that include the date your parent entered a Medicaid-approved nursing home or medical facility
Documentation proving your parent/child relationship such as a birth or adoption certificate
A deed, mortgage documents, or other information that outlines the details of the home transfer
Proof that you lived with your parent for the previous two years while providing a specific level of care ^[03]

Support for families exploring care options for an aging loved one

For state-specific information about the caregiver child exemption, contact your state’s Medicaid office or consult with an elder law attorney.

If you’re exploring care choices for your loved one, our Senior Care Advisors can provide information on home care services and other senior living options. However, please note that we do not refer families who are using public pay options like Medicaid to cover senior living services.

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References

Centers for Medicare and Medicaid Services. Estate recovery.
Legal Information Institute. 42 U.S. Code § 1396p – Liens, adjustments and recoveries, and transfers of assets. Cornell Law School.
Social Security Administration. (2009, July 20). Program operations manual system.

Meet the Author

Kevin Ryan

Kevin Ryan is a copywriter at OurParents. He has written about Medicaid and Medicare, and focuses on creating content for caregivers. Previously, Kevin worked as a freelance writer, a special education teacher, and a counselor for adults with developmental disabilities. He earned a bachelor's degree from the University of Colorado Boulder.

Edited byKristin Carroll

Reviewed byLetha Sgritta McDowell

The information contained in this article is for informational purposes only and is not intended to constitute medical, legal or financial advice or create a professional relationship between A Place for Mom (of which OurParents is a trademark) and the reader. Always seek the advice of your health care provider, attorney or financial advisor with respect to any particular matter and do not act or refrain from acting on the basis of anything you have read on this site. Links to third-party websites are only for the convenience of the reader; A Place for Mom does not recommend or endorse the contents of the third-party sites.

A Guide to the Medicaid Caregiver Child Exemption