As your parent ages, it’s natural to want to help them prepare for their future needs. While you can take steps to help them age in place for as long as possible, you should also consider what will happen if and when they need long-term care. It’s essential to engage in long-term care planning and prepare for the possibility of needing Medicaid coverage before your loved one’s care needs increase. Learn how you can potentially utilize the Medicaid caregiver child exception to help your loved one maintain Medicaid eligibility and pass on their home to a caregiver child.
How does Medicaid work?
Medicaid helps low-income seniors and people with disabilities cover the costs of health care and long-term care. However, to qualify for Medicaid benefits, older adults must meet strict financial eligibility criteria.
In order to qualify for Medicaid long-term care coverage, a single applicant can typically have only $2,000 or less in countable assets. Asset limits for Medicaid can be highly complex. As such, there are exceptions to this and each state may have some discretion in setting asset limits.
Some assets may also be deemed noncountable, such as an applicant's primary residence and a single vehicle used for their transportation. Noncountable assets don’t count toward the $2,000 asset limit.
Qualifying for Medicaid long-term care coverage
It’s important to understand that Medicaid has a look-back period when it comes to financial transactions. The look-back period is a window of time during which Medicaid will examine an applicant's financial activities. This varies by state, but it may be as long as 60 months.
A plan (sometimes referred to as a “spend-down plan”) may be necessary if your loved one’s countable assets exceed $2,000. Failing to properly spend down assets can result in Medicaid penalties, which make your loved one ineligible for Medicaid coverage for a certain time period. An elder law attorney or an elder-focused financial advisor can help your loved one craft a plan for legally reducing their countable assets and qualifying for Medicaid in the future.
Read: Applying for Medicaid: An Elder Law Attorney Can Help
How does the Medicaid caregiver child exception work?
The Medicaid caregiver child exception, also sometimes referred to as the child caregiver exemption or the caretaker child exemption, allows a parent to gift their home to a caregiver child without triggering a Medicaid penalty period. However, this exception only applies if very specific conditions are met.
It’s important to understand that Medicaid isn’t necessarily a free program. Medicaid programs in each state must attempt to recover certain payments for a Medicaid beneficiary’s care, according to the Centers for Medicare & Medicaid Services. This process is referred to as Medicaid estate recovery. After a Medicaid beneficiary dies, the state may place a lien, a legal claim, on their estate. A beneficiary’s home is usually the largest remaining asset in a senior’s estate, and this is often what the Medicaid estate recovery program tries to collect against.
Qualifying for the Medicaid caregiver child exception is one way that may prevent this from happening following a senior’s death.
How can I qualify for the Medicaid child caregiver exception?
There are two basic requirements for the Medicaid caregiver child exception, as noted by the Department of Health and Human Services:
- The child must have lived in the parent’s home for at least two years immediately prior to the parent requiring long-term care services, such as Medicaid nursing home level care.
- The child must have provided care to their parent, which helped the parent remain in their home and out of a nursing home.
You’ll likely have to provide substantial evidence to qualify as a child caregiver, so be sure to take detailed notes and save important documents. Typically, this exception is for biological or legally adopted children only.
Examples of caregiver child efforts
Some states will require you to prove that your loved one would've needed institutional level care without you living in their home as their caregiver. To establish this, you may need to provide items such as:
- A statement from your loved one’s doctor (or another qualified medical professional) asserting that the above is true
- Medical records or professional documentation of your loved one’s health conditions and diagnoses, such as a dementia diagnosis.
It’s likely that you’ll also need to prove that you resided in your parent’s home for a minimum of two years prior to institutionalization. This may be proved through copies of the following documents:
- Tax returns
- Driver’s license
- Bills or mail received at your parent’s address
- Proof of car insurance coverage
Additionally, you must prove that you provided care to your parent. You may be able to do this using the following:
- Your own documentation of your caregiving efforts
- Statements from witnesses who have seen you providing care to your parent
- Doctor’s notes
It’s important to note that some states may frown upon an adult child working a job outside of the home while serving as their parent’s caregiver.
In general, what qualifies as proof of being a caregiver to a parent may vary between states, and it may also depend on the interpretation of the eligibility worker who's evaluating your case. Federal guidelines may be broad enough for states to create their own interpretations, which may be more stringent. For example, what's legal in Florida may not be legal in New York or Oregon. This is why it’s ideal to work with a local elder law attorney when planning ahead for your loved one’s long-term care.
Why should my family consider the Medicaid caregiver child exception?
A parent may wish to leave a legacy by passing their cherished family home in a beloved neighborhood to their adult child. The Medicaid caregiver child exception may allow your loved one to do the following:
- Stay in their home while receiving the care they need from their adult child
- Gift their home to their adult child, who acts as their caregiver
- Maintain Medicaid eligibility should they need to apply for coverage in the future
What should a family caregiver consider before moving in with a parent?
As a family caregiver, you should take time to contemplate if moving in with your parent is right for both of you. It can be challenging to live together again and navigate changes in your relationship dynamic. Your parent has likely spent much of their life as your caregiver, but now the roles are being reversed. This can be an uncomfortable transition.
You should consider the following questions:
- Does my parent want me to move in?
- How will living with and caring for my parent affect my lifestyle?
- Is my parent comfortable with me being their live-in caregiver?
- What type of care does my parent need? Is that care that I can reasonably provide with my skillset?
- If my parent requires around-the-clock care and supervision, will I be open to hiring an in-home caregiver?
- Is my parent’s home suitable for their current and future needs? If not, what kind of home modifications may be necessary? Will a move to a senior living community better serve my loved one’s care needs?
If you and your parent agree on a live-in caregiver plan, you should consider seeking counsel from a local elder law attorney and a qualified financial advisor prior to moving in. They can help you navigate the legal and financial complexities of this arrangement. Additionally, if you’re interested in pursuing the Medicaid caregiver child exception, they may be able to provide state-specific guidance and advice tailored to your family’s unique situation.
How can I help my loved one stay at home longer?
Whether you move in with your parent to care for them or not, home care can help support your loved one in either situation. Adding a professional caregiver to your loved one’s care team can help them live safely in their home and enhance their quality of life.
If you choose to live with your parent, in-home caregivers can also act as respite care for you. This will allow you to take a break, so that you can maintain your own physical and mental health. While you care deeply for your parent, you cannot stretch yourself so thin that caregiving is unsustainable for the long term. You deserve to take care of yourself, too.
Reviewed by Certified Elder Law Attorney Letha McDowell.
Sources:
Understanding the Medicaid Caregiver Child Exemption (https://www.avvo.com/legal-guides/ugc/understanding-the-medicaid-caregiver-child-exemption)
Estate Recovery (https://www.medicaid.gov/medicaid/eligibility/estate-recovery/index.html)
Medicaid Treatment of the Home: Determining Eligibility and Repayment for Long-term Care (https://aspe.hhs.gov/sites/default/files/migrated_legacy_files/41441/hometreat.pdf)