Medicaid’s gift to children who care for parents at home

In most states, transferring your house to your children (or someone else) may lead to a Medicaid penalty period, which would make you ineligible for Medicaid for a period of time. However, there are circumstances in which transferring a house will not result in a penalty period.

One of those circumstances is if the Medicaid applicant transfers the house to a “caretaker child.”  This is defined as a child of the applicant who lived in the house for at least two years prior to the applicant’s entering a nursing home and who during that period provided care that allowed the applicant to avoid a nursing home stay.  In such cases, the Medicaid applicant may freely transfer a home to the child without triggering a transfer penalty.  The exception applies only to a child, not a grandchild or other relative.

Each state Medicaid agency has its own rules for providing proof that the child lived with the parent and provided the necessary level of care, making it important to consult with your attorney before making this (or any other) kind of transfer.

A home may be also transferred without Medicaid’s usual penalty to:

• A spouse,
• A child who is under age 21 or who is blind or disabled, or
• A sibling who has lived in the home during the year preceding the applicant’s institutionalization and who already holds an equity interest in the home.