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She continue to live there. My brother moved in to take care of her after my dad's death 5 yrs ago. She could no longer maintain it.

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Unfortunately, the Caretaker Child exception only eliminates the transfer penalty if it is applicable at the time of the transfer of the home. (Such exception applies if at the time of the transfer of the home to a child, the child has already lived in the home with the parent for at least two years immediately before the parent entered the nursing home and whose care allowed the parent to delay moving to the nursing home. 42 U.S.C. §1396p(d)(4)(A).)

It's always possible--if not necessarily practical--to reverse a penalty-causing gift, but it sounds like in your case the house has already been sold. If the proceeds then went to your brother, he could give the money back to your mom, who could then do proper Medicaid planning to reduce the amount of money so she can qualify for Medicaid sooner. Otherwise, if she applies for Medicaid within 5 years of the transfer of the house to your brother, there will be a long penalty period.
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Even if you can afford an attorney, or if an Elder Affairs attorney represents your loved one, many of the answers to your Medicaid and Asset Recovery questions can be obtained by Googling your state's Medicaid web site, and then searching for "Asset Recovery." From there, read the guidelines. Use the Contact Us link and send an e-mail to ask to speak to an Asset Recovery specialist. This person knows most of the rules. Save yourself a ton in attorney fees by doing a lot of the up-front research that is state-specific. With that knowledge, at least you will know what questions to ask when and if you are able to hire an NAELA Elder-Affairs Attorney. Going down this trail too, and this is what I've spent hours learning. Hope this information can help someone else, especially if they cannot afford an attorney.
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You are asking if your mother can be penalized under Medicaid for a transfer of her house to her son. At one point you state she sold it, and yet in another place you state she gave it to her son. If the home was sold for less than fair market value, there may be an issue with Medicaid. State laws differ, but in our state, Pennsylvania, had she continued to own and live in the home and if her son was both a caregiver and living in the home, a lien would not have been placed on the home for Medicaid services rendered. Can the house be transferred back? The answer to that question depends on your state's law.
Unfortunately, a lot of people give inaccurate or incomplete information. If you are caring for someone, and acting as an agent under a power of attorney, you may have a fiduciary duty to seek the assistance of a geriatric care manager and/or an elder law attorney.
There is another elder law attorney on this list, K. Gabriel Heiser, who published a book. I've never met him in person but I did review read his book. I highly recommend the book. The price is quite reasonable, it has a money back guarantee, and it does explain things in simple terms. The major difference is that he knows what he is talking about. He has not asked me to review his book.. Try the book. If you don't like it, return it. I think he is listed as one of the experts for this web site, and there is a reference to his book. Again, try the book and if you don't like it you can return it. I think you may think it well worth the price, and you will be a much better client if you do visit an elder law attorney later on.
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The home must be sold at reasonable "market value" within the 5-year window prior to going on Medicaid. This is especially true if your mother plans to go into a nursing home. If your brother has lived in the home for 5 years, Medicaid may allow him to continue living in the house, but when he moves or passes away, the proceeds of the sale of the home will need to be paid to Medicaid's asset recovery. Google your state's Medicaid requirements for Asset Recovery for definitive answers. Good luck.
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My Mom, who lives in Oregon in assisted living, and I, who lives in our (50/50 jointly-owned) property in California, had lived together in our place for 22 years before Mom had been moved out because of several falls and injuries at home. Mom has started Oregon Medicaid in December 2013. I have been out of a permanent clerical job, have a disability and cannot find work. My Oregon family has advised Oregon Medicaid to not place a lien on our property because of my disability. I have applied for SSDI for some stable income while still obtaining help from the state of CA for job coaching and a hopeful long-term job, but the future does not look very bright for me at age 58. All I want is stability while I wait for SSDI benefits to start; I have a few years of savings to live on because I had steady work for over 30 years.Let's hope that Medicaid does not try to place a lien on our property after Mom passes.
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Yes, every last penny will result in a Medicaid penalty. Now tell him to go get a mortgage so he can pay it back.
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Maybe, maybe not. While it is true that there is a 5 year look back period for all property transfers and gifts when applying for Medicaid - there is also a "caregiver" exemption clause. If an caregiver adult child moves in to look after the parent for at least 2 years prior to going into a nursing home, then the home can be transferred to the child and should be regarded by Medicaid as an exempt transfer. Whether they will lien the property after she passes is another matter and its possible this could also be avoided with creative estate planning but you need to consult with a really good Elderlaw/Medicaid attorney to discuss this matter. Many attorneys will say they do estate planning and Medicaid applications but in realty, they are often a "jack of all trades" and don't deal with Medicaid enough to be an expert. Find a good Elderlaw attorney who is a member of NAELA and pay him for an hour consultation to discuss your situation.
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Because the title transfer was already made, the bell has already been rung, so to speak. You know the old adage about not being able to on ring a bell? Please excuse the double negative but you CAN'T afford NOT to consult an attorney before you do even one more thing that will be difficult to undo. You can start online and have a legal question answered by a lawyer. Just Google "AVVO lawyer" and choose the link.
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Laws differ from state to state, and there are many exceptions to various rules. Do as much homework as you can but do seek legal counsel. As others mentioned many attorneys say they are elder attorneys but don't really know about recent changes in laws and the intricate points. In California for example the state has become more aggressive in reclaiming compensation for Medical or Medicaid. Good luck to you,
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