There is a generous exception to the Medicaid Five Year Look back and Ineligibility rules. That exception is called the Family Caregiver Exception.
Generally, a parent can transfer their home to a child who has lived in the parent’s home and has provided care to them for at least the two years prior to the need for nursing home care. That care provided must be determined to have been necessary to keep the parent at home and absent the care, the parent would have entered a nursing home.
Interestingly, we have many parents who actually sell their own home and move into their child’s home. Obviously, this scenario does not fit within the family caregiver exception because the parent does not own the home. Assuming the care provided by the child fits the statutory definition and we expect the parent to live in the home for at least two years before entering a nursing home, strong consideration should be given to the parent purchasing the child’s home.
Now the child has the cash received from the sale which they can invest as desired and the parent owns the home. Therefore after two years, assuming all other factors are met, the parent can transfer the home to the caregiver child should the parent need long term nursing home care. As a result, the child still has the original sale proceeds and the home without ever incurring the five year Medicaid ineligibility.
This can be very powerful for those who fit within this exception and the necessary structure. Extreme care should be taken and this option should be reviewed closely with experienced advisors.
