Child Caregiver Exception
What Is the Medicaid Child Caregiver Exemption?
The Medicaid Child Caregiver Exemption—also called the Child Caretaker Exemption—lets a senior transfer ownership of their primary home to an adult child who has been providing care, without violating Medicaid’s look-back rules or losing long-term care Medicaid eligibility.
Normally, Medicaid enforces a 60-month look-back period to review asset transfers before a Nursing Home Medicaid or HCBS Waiver application. Transfers for less than fair market value during this time usually trigger a penalty period of ineligibility. This exemption makes it possible to give the home to a caregiving child without penalty if all requirements are met.
The exemption also shields the property from Medicaid’s Estate Recovery Program (MERP), which otherwise seeks reimbursement after a Medicaid beneficiary’s death.
The transfer is considered compensation for the care that delayed “institutionalization,” which includes not just nursing homes, but also qualifying HCBS Waiver programs, assisted living, or adult foster care.
Other penalty-free transfers exist, such as to a spouse, a minor child under 21, a blind or disabled child of any age, or via the Sibling Exemption.
How Does the Child Caregiver Exemption Work?
To qualify:
- The adult child must have lived with their parent in the parent’s primary home for at least two continuous years immediately before the parent’s admission to a nursing home.
- The care provided must have been substantial enough to delay the need for nursing home placement during that time.
- Care generally includes help with ADLs (bathing, dressing, toileting, eating, mobility) and IADLs (meal preparation, shopping, medication management, transportation).
Some states allow the caregiver child to work outside the home as long as alternate care is provided during work hours; others are stricter. The caregiver must be a biological or adopted child—stepchildren, in-laws, and grandchildren do not qualify.
Only a primary residence can be transferred under this exemption. Second homes or vacation properties are not eligible.
What Proof Does Medicaid Require?
Applicants must document that all requirements have been met. Common proof includes:
- Relationship proof – Birth certificate or adoption papers.
- Residency proof – Driver’s license, tax return, utility bills showing the same address as the parent’s home, or sworn affidavits from neighbors and relatives.
- Care provided – A physician’s statement confirming the care was necessary and prevented nursing home placement, medical records, and a daily care log.
- Alternative care proof – If the child worked outside the home, documentation from adult day care centers or in-home care agencies showing services provided during work hours.
Are There Limits on the Value of the Home?
While most states have a home equity limit for Medicaid eligibility, there is no value cap when a home is transferred under this exemption. However, if the home equity exceeds the state’s limit before transfer, it could impact eligibility. This is especially relevant if trying to qualify for Medicaid before completing the transfer.
How Is the Home Transferred to the Caregiver Child?
Most often, the home is transferred via a Quit Claim Deed (QCD), which conveys ownership without a traditional sale. This process usually involves completing the deed form, notarizing it, and filing it with the county clerk. Requirements can vary by state, so it’s important to follow local legal procedures.
Do All States Follow the Same Rules?
The core requirements are consistent: two years of co-residence and care sufficient to delay nursing home admission. However, state interpretations vary. For example, New Jersey previously denied the exemption if the caregiver child wasn’t the sole caregiver, but a 2021 court ruling changed that. Always confirm your state’s rules before making a transfer.
Should You Get Professional Help?
Yes. Even though the Child Caregiver Exemption rules seem clear, state-specific differences, documentation requirements, and interpretation issues can lead to costly mistakes. A Certified Medicaid Planner can confirm your eligibility, help gather proof, and explore other strategies—such as Lady Bird Deeds—to protect the home from Medicaid recovery.
