PLANNING OPTIONS TO PROTECT THE FAMILY HOME UNDER THE MEDICAID RULES

Many of my clients ask me how they can protect their house from being lost if they need to go into an assisted living facility or nursing home. There are several options which may protect the family home, depending on the circumstances. 

First, for married couples where one of the spouses requires placement in an assisted living facility or nursing home, the Medicaid regulations allow the home to be re-titled in the name of the healthier spouse who continues to live in the marital home.  In that case, the home is exempt or protected from the usual “spend down” of assets for Medicaid eligibility.

Another way to protect the family home under the Medicaid rules is by use of the “caregiver child” Medicaid rule.  The caregiver child rule can apply to a situation where a child takes care of a parent in the parent’s home for at least 2 years.  If the caregiver child documents their care of the parent and shows that the parent would have required care in a nursing home without the child’s care at home, the home may be transferred from the parent to the child without any Medicaid penalty or disqualification period.  This is a huge savings and an exception to the usual Medicaid gifting rules.

Generally, those who gift their home to their children and then apply for Medicaid benefits within 5 years would be disqualified from receiving Medicaid benefits for several years.  But if the child meets the caregiver exception, the home may be transferred free and clear of Medicaid penalties.

It should be noted that the Medicaid offices require thorough documentation in order to meet the caregiver child exception. This documentation typically includes medical records showing that the parent required nursing home level care and affidavits from the child and others to substantiate the care provided to the parent. And not every child will be suited to provide the care necessary to meet this Medicaid planning option.  For those families where this arrangement will work, homes with substantial value may be protected within the family without Medicaid penalty consequences.