As you age, there’s an increasing chance that you may need long-term care in a nursing home or other facility. When you do, there’s also a chance you may need the help of Medicaid to pay for it; most people can’t afford to bear the high cost of nursing home care out-of-pocket for very long. But in order to qualify for Medicaid, you need to “spend down” your assets. For many people, this may mean needing to sell the home they have been living in, rather than leaving it to their families. The Medicaid “child caretaker” exception offers a potential way out.
Nursing home care is rarely a first choice for people coming to terms with an inability to manage on their own. Often, in an effort to avoid the need to move to a long-term care facility, an older person will rely on in-home care from an adult child. Whether the child had already been living in the home with the parent, or moved in when the need for care became apparent, selling the house may produce an unjust result.
One common scenario is that of an adult child who has lived with an older parent for years or decades, and naturally fell into the caretaking role as the parent's health declined. Because of the child's care, the parent was able to avoid the nursing home for months or years, but now needs long-term care. Selling the home to pay for care deprives the adult child not only of her expected inheritance but of her home.
A natural impulse for those facing Medicaid's strict limits regarding assets would be to transfer assets to loved ones so that they wouldn't "count" for Medicaid purposes. The government has anticipated that impulse, and has in place a five year "look-back" period. Medicaid looks at all transfers in the five year period prior to an application for Medicaid assistance. If the applicant has transferred assets for less than their fair market value, he or she is disqualified from receiving Medicaid assistance for a period of time. Depending on the amount of assets transferred, this could be months or even years.
The government's purpose in implementing the five year look-back period is to prevent fraud, not to work an injustice on families. So, in situations like the one described above when there is an adult child who has cared for a parent at home, the Medicaid child caretaker exception comes into play.
The child caretaker exception allows a parent to transfer their home to an adult child who lived there with them and provided care for them for at least two years before the parent entered a nursing home. If a transfer of a home is made under the child caretaker exception, the parent who transferred the home will not be ineligible for Medicaid benefits because of the transfer.
A family seeking to qualify for the child caretaker exception must be able to prove two things: first, that the adult child resided in the home with the parent for at least two years prior to the nursing home admission; and second, that the care the child provided during that time allowed the parent to stay out of a nursing home.
A family seeking to qualify for the child caretaker exception must be able to prove two things: first, that the adult child resided in the home with the parent for at least two years prior to the nursing home admission; and second, that the care the child provided during that time allowed the parent to stay out of a nursing home. Note also that the child caretaker exception is available only for the adult child of the Medicaid applicant—not a niece, nephew, sibling, or other relative.
Parent and child will want to do everything possible to document both the child's residence with the parent and the care provided to the parent, so that the state's Medicaid office will agree that the child caretaker exception applies.
Documenting your residence with your parent should be reasonably straightforward. If you are living with and caring for a parent in their home, you can take the following actions:
If needed, you may also get affidavits (statements signed under oath) from neighbors or other people who knew you were living with and caring for your parent to establish both your residence and the extent of your service to your parent.
Documenting the care you provide for your parent may be a little more difficult than proving that you lived with them. How much care is necessary to qualify for the child caretaker exception, and how can you prove that you delivered it?
You can start by obtaining medical records and letters from your parent’s medical providers stating that your parent’s condition warranted care in a nursing home. You should keep a care log indicating your parent’s medications and treatments and when they were administered. Transport your parent to medical appointments, and document those in the care log as well. Again, affidavits can be useful in proving your role in keeping your parent out of a nursing home. Anyone who has witnessed your care can attest to it: family members, neighbors, even aides or nursing assistants who come into the home to help and know the extent of the care you give your parent.
Whether you are just now moving in to care for your parent, or have been living with your parent for years and are now facing the prospect of moving them to a nursing home, contact an experienced elder law attorney before transferring any assets and to make sure you are safeguarding as much of their assets as possible. We invite you to contact our law office to schedule a consultation.