What Is the Medicaid Caregiver Child Exemption?

Medicaid is a joint program of state and federal governments designed to help people who have low incomes and limited assets pay for care. It can cover long-term care services, including nursing home care, for people who meet their state’s financial and care-need requirements.

Medicaid long-term care programs limit the assets an applicant can own, although the rules and limits vary by state. A parent’s primary home may be treated differently from cash, investments, and other property when Medicaid reviews eligibility during what’s known as its “look-back period.” But transferring a home to an adult child for less than fair market value can still trigger a Medicaid transfer penalty.^[01,02]

The Medicaid caregiver child exemption is a limited exception. It may allow a parent to transfer their home to an adult child who lived with them and provided care that allowed the parent to remain at home before entering an institution.

Let our care assessment guide you

The three general requirements for the Medicaid caregiver child exemption are that:

1. The home being transferred is the senior’s primary residence. Vacation or second homes don’t qualify.
2. The adult child has lived with their parent for the two years immediately preceding the parent’s move to a nursing home.
3. The adult child must have been the parent’s primary caregiver.

Documentation and proof that these requirements have been met may vary by state, so check your loved one’s state Medicaid program rules or consult an elder law attorney to fully understand what must be provided.

The caregiving requirement focuses on whether the care you provided allowed your parent to remain at home rather than enter an institution. Medicaid doesn’t use one universal list of caregiving tasks or a single required number of hours. Your loved one’s state determines how it evaluates the care provided and what records you’ll need to show.

What caregiving may be required

Care that prevents or delays the need for someone to enter a nursing home usually involves helping with a combination of activities of daily living (ADLs), such as:^[02]

• Dressing
• Eating
• Bathing
• Transferring into and out of bed
• Using the toilet

Many states require documentation of this care such as a daily care log that includes medications taken and doctor appointments. ^[02]

How much caregiving is required

In the case of the Medicaid caregiver child exemption, most states require the adult child who’s living with their parent to provide most of the care services, but this doesn’t necessarily mean that care must be provided on a full-time basis.^[03] Some states allow the adult child to work at a job outside the home and hire in-home care for the senior during their work hours.^[02]

The Medicaid caregiver child exemption is intended for situations in which your care allowed your parent to remain at home before they needed Medicaid long-term care. The type of care your parent receives next may affect the Medicaid category uses to review the home transfer and the documentation their state requires.

Your parent may enter a Medicaid nursing facility or, in some circumstances, receive qualifying home- and community-based services (HCBS) while remaining at home.^[01] If your parent is considering assisted living, Medicaid eligibility rules vary by state and coverage generally doesn’t include room and board.

Understanding your parent’s next care arrangement can help you confirm whether the exemption may apply and plan for the care and costs that remain after the home transfer.

Talk with a Senior Living Advisor

This exemption may apply to your family if your loved one will need to move into a nursing home using Medicaid benefits, and if the adult child is or will be the main caregiver while living in the senior’s home for the required two-year period. Consult their state’s Medicaid program or an elder law attorney to confirm the following:

• The level of care the adult child must provide
• The documentation Medicaid requires to verify that care was provided
• Whether the senior must move into a nursing home or whether they may be eligible for an HCBS waiver that would allow them to receive care in a setting other than a Medicaid nursing home
• Legal steps required to transfer the deed to the home from the senior to their adult child

Before initiating the transfer of a deed, gather records and details that you’ll need to facilitate claiming this exemption, including ^[03]:

• Details about the transfer, such as the adult child who will receive ownership of the home, when it will take place and for what amount, if any; this may include the deed to the home and mortgage documents
• Proof of the parent-child relationship
• Documentation showing that the adult child who will receive the home has provided care for their parent for the previous two years (e.g., a letter signed by the parent’s doctor)
• Proof that the parent will enter or has already entered a nursing home or Medicaid-approved institution for care, including dates

Questions to ask

When speaking with a Medicaid representative or elder law attorney, ask:

• Does my parent’s Medicaid long-term care category enable us to use the caregiver child exemption?
• Does the care I provided meet this state’s standard for allowing my parent to remain at home?
• What dates do I need to prove for my residence, caregiving, and my parent’s long-term care needs?
• Does care provided by other family members or paid caregivers affect whether I qualify?
• What documentation on caregiving and medical needs is required?
• Should we obtain a state determination or legal review before transferring the deed?
• How should we submit the documentation, who should receive it, and when?

While A Place for Mom’s Senior Living Advisors don’t provide Medicaid or tax advice, they can help your family compare senior community living options and provide advice tailored to your location and budget. At no cost to you, they’ll help you find care options that are right for your family.