What proof is needed for the Child Caregiver Exemption
By Paul Lorah, Medicaid Plus, P.C
Under certain circumstances the federal guidelines allow Medicaid applicants to transfer their home to a child caregiver without suffering a Medicaid penalty for the transfer. It is a transfer often attempted by families in the Medicaid application process. It is also a transfer that often fails to meet the requirements necessary for the Medicaid agency to acknowledge the transfer under the child caregiver exemption.
The federal guidelines for the transfer remain somewhat vague, declaring that each state must develop “reasonable standards … for determining eligibility for and the extent of medical assistance,” and that the individual must “fulfill the criteria established by the State in which he lives.” 42 USCA 1396a(a)(17)(A), 453 US 34. This makes it of critical importance that we look to our individual state laws for the specific guidelines necessary. It is also crucial that our clients provide the documentation necessary to prove they acted as a caregiver for the parent for at least two consecutive years prior to the transfer.
Generally, individual states require that the child caregiver has lived in the parent’s home for at least two consecutive years immediately preceding the first day that the parent entered the facility AND provided full-time care for the parent AND can show proof that without the care provided by the child, the parent would have to had entered the facility 2 years earlier.
This is a very specific burden to meet. In May, the Superior Court of New Jersey held that a transfer made to a child caregiver who had taken care of her parent for five years prior to institutionalization and met all other requirements of the rule was not valid because the parent had left the nursing home and resided with her son for five months prior to moving back to the nursing home and making the transfer to the daughter. MK v. Dep’t of Human Services, Superior Ct of NJ, Docket No. A-0790-14T3.
So, what must our clients have in order to make the transfer? First, we must have a clear understanding of the Medicaid guidelines in our own states. Then we need to be sure our clients obtain [and we review], the required documentation. Although it will vary by state, below is a minimum of what will be required to prove a transfer of the home is valid under the Medicaid Child Caregiver Exemption.
1. Physician's Statement
The first step is to have our clients bring a letter from the doctor as soon as they indicate they may qualify for the exemption. The doctor must state all conditions that the parent suffers from, the time period the parent has suffered from those conditions, and that BUT FOR THE CARE OF THE CHILD, the period of time the parent would have required institutional care. Medicaid may, after reviewing the doctor’s letter, request medical records; however, they do not generally need to be provided without Medicaid requesting them.
2. Statement of Services Provided
Medicaid will generally require that a statement be provided showing the specific services that were provided during the 2 year period and the hours that care was provided.
3. Proof of Child’s Address
To qualify for the exemption, the child is required to have lived in the parent’s home for the two years IMMEDIATELY preceding the institutionalization. If the child owns their own home and spent part of the time there may pose an issue. Any break in living together in the parent’s home may pose issues as it did in the New Jersey case.
4. Proof of Relationship
If the child has a different last name than the parent, he or she needs to be prepared to present a birth certificate in order to prove relationship. Step-children or in-laws do not qualify for the child caregiver exemption.
5. Proof the Child Provided Full-Time Care
This step is the most difficult test to pass. If the transfer is to be denied, this is what will cause it most of the time because it is very difficult to have provided full time care for a parent for 2 years without having any source of income. Medicaid will usually ask for the past two years of tax returns. Clients usually run into an issue here if they worked during the past two years. Generally, the exemption disallows any occupation other than acting as caregiver for the parent. However, in some states, part-time work outside the home may be allowed when another child was providing services, during that time period, but not always.
Some states also require a statement from a third party attesting to the knowledge that the child provided such care for the 2 year period.
A recap. The first step in the hopes of successfully transferring a home under the child caregiver exemption is knowing the rules of your jurisdiction. Second, you must be sure that ALL of the proof required to meet Medicaid’s standards can be provided. Often, it is the second prong where we run into trouble. Medicaid rules are not flexible [caseworker's will almost always interpret the rules as they see fit] and documentation must prove that each prong of the state standard is met.
The moral of the story? If you're going to attempt to transfer a home [for any reason], expect a big push-back from Medicaid EVERY time.
The Medicaid agencies are becoming more and more strict regarding the transfer of a home because that is where Medicaid will recoup their money during it's Estate Recovery Process. They know that due to the strict financial guidelines, the Medicaid recipient will not have any money or assets at the time of their death except for the possibility of a home. So they will make every attempt to protect that home for their own possible gains.
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About the author: Paul Lorah is a Medicaid expert with more than 6 years experience in Medicaid Planning, eligibility, applications and asset protection strategies. He has authored the following books - "How to Get Medicaid to Pay Your Long Term Care Costs" and "Planning and Paying for Long Term Care".