The Caregiver Child Exception

By David O’Neill

A skilled and experienced Elder Law Attorney at LG&T can help you and your family navigate the complexities of a Medicaid application for a resident of a nursing home in New York State.   In order to qualify for Medicaid to assist in paying for the cost of a nursing home, an applicant must meet certain eligibility requirements for his or her “resources” and “income”.  The Medicaid rules differentiate between exempt assets and countable assets when making an eligibility determination.  Furthermore, Medicaid will “look back” for a period of 5 years at an individual’s assets and transfers of those assets when making an eligibility determination to search for “uncompensated transfers,” or gifts, during that 5 year period immediately preceding the Medicaid application.

On a practical level this 5 year “lookback” period makes sense. Medicaid is a “needs based” program aimed at paying the healthcare costs of those with a financial need, so it would be unfair for an applicant to gift their assets immediately preceding a nursing home admission or a Medicaid application in order to qualify for health care assistance.  

One of the most important assets an individual may own is their home.  Homes are often the cornerstone of an individual’s net worth.  The applicant’s primary residence can be an “exempt” resource for Medicaid eligibility purposes if the applicant has a subjective intent to return home.  The catch, however, is that the Department of Social Services, in connection with the Medicaid approval, can place a lien against the real property by filing a document in the County Clerk’s Office.  A variety of planning tools are available to try to “shelter” or “save” the applicant’s home.   One such planning tool to discuss is whether the caregiver child exemption is right for your situation.

The caregiver child exemption is a way for a Medicaid applicant to transfer his or her primary residence to an adult child that has provided them with assistance or care while residing in the home with the parent.  This would effectively allow an applicant to transfer the home with a deed to the caregiver child without any concern or issue related to the 5 year “lookback” period.  Medicaid allows the home to be transferred for less than “fair market value” and the home can be gifted to the caregiver child.  There are four necessary elements for the caregiver child exemption:

  1. The “caregiver child” must be either a biological or adopted adult child of the Medicaid applicant.
  2. The adult child must live in the primary residence at the time of the transfer.
  3. The adult child must be able to prove that he or she resided in the primary residence for a period of at least two continuous years prior to the Medicaid applicant’s admittance into the nursing home.
  4. During that two year period, the adult child must have helped the Medicaid applicant in ways that “delay the applicant’s need for nursing home care.”

If these conditions are met, after the gathering of documents sufficient to meet the Medicaid filing requirements, the home of a Medicaid applicant can be transferred to a caregiver child.  There will be no “penalty” for the transfer even though there is a 5 year loopback period.   

This Medicaid process can be complicated and overwhelming.  This short article is intended to provide a very basic and broad overview of the caregiver child exemption only.  For further questions, please contact our experienced team here at LG&T to set up a consultation to figure out if the caregiver child exemption is right for you.

Below are two short questions to test your knowledge on the caregiver child exemption.

Q: Donald is a 71 year old man who has needed nursing home care for the last four years.  With the consistent help of his nephew Caleb and neighbor Art he has for a period of 48 continuous months, been able to avoid nursing home care.  Caleb and Art help him with a wide range of day-to-day activities such as using the restroom, hygiene and feeding.  Immediately prior to applying for Medicaid, Donald attempts to apply for the caregiver child exemption to transfer his home to Caleb and Art.  Donald’s Medicaid application was not immediately approved for coverage of the nursing home bill.  Why?  

A: The caregiver child exemption does not apply, because Caleb and Art are not Donald’s biological or adopted children.  This exemption is limited to children of the Medicaid applicant.  The transfer to Caleb and Art will be a “gift” subject to the 5 year lookback.  

Q: David is a 71 year old man who has needed nursing home care for the last four years.  With the consistent help of his biological daughter Ren, David has been able to avoid nursing home care for four years.  Ren helps David with day-to-day tasks such as using the bathroom, hygiene, and bathing.  Ren resides with David at his primary place of residence at 46 Main Street.  Ren and David have made the decision that David needs nursing home care.  Prior to the Medicaid application, the documents are signed to transfer David’s summer cabin in the Catskill Mountains to Ren.  Medicaid issued a decision that does not immediately approve Medicaid coverage for David.  Why?

A: The caregiver child exemption applies only to the principal place of residence, not summer cabins or secondary properties owed by the applicant.  The transfer of the summer cabin is a “gift” subject to the 5 year lookback.  David can transfer the primary residence at 46 Main Street to Ren without a Medicaid problem. 

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