When planning for long-term care, many families in New York worry about how to preserve the family home while qualifying for Medicaid. One powerful — but often misunderstood — planning strategy is the “Caretaker Child Exemption” also known as Caretaker Child Home Transfer. This exemption allows a Medicaid applicant to transfer their primary residence to a child without triggering a transfer penalty, provided certain requirements are met.
What Is the Caretaker Child Home Transfer?
Under New York Medicaid rules, transferring assets — including a home — within five years of applying for Medicaid can trigger a penalty period, delaying eligibility for nursing home care. However, the caretaker child exemption is one of several exceptions to this rule.
Legal Basis:
- 42 U.S.C. § 1396p(c)(2)(A)(iv) (federal law)
- NY Social Services Law § 366(5)(d)(3)(ii)(D) (New York law)
These provisions allow the transfer of a Medicaid applicant’s home to a child without incurring a penalty if:
The child resided in the home for at least two years immediately before the applicant entered a nursing home, and
Provided care that allowed the parent to remain at home instead of being institutionalized.
Requirements for a Valid Caretaker Child Home Transfer
To qualify for the caretaker child home transfer exemption in New York, the following elements must be satisfied:
- Residency – The child must have lived in the parent’s home for at least 24 consecutive months prior to the parent’s nursing home admission.
- Level of Care – The care provided must have been essential to prevent institutionalization. This includes assistance with:
- Medication management
- Meal preparation
- Mobility assistance
- Personal hygiene
- Monitoring chronic conditions
- Medication management
- Documentation – You must be able to prove both residency and the level of care. This can be shown through:
- Affidavits from doctors or home health aides
- Rent or utility bills in the child’s name
- Tax returns showing the address
- Care logs or calendars
- Affidavits from doctors or home health aides
- Driver’s License
- Timing of Transfer – The home must be transferred before the Medicaid application is submitted, and preferably after care has been clearly documented.
Why Use the Caretaker Child Home Transfer?
The primary benefit of using the caretaker child home transfer is that it allows families to protect the value of the home from Medicaid estate recovery without incurring a penalty period.
Without the exemption, transferring the home to a child is typically subject to a 60-month “lookback” period. If the home is gifted within that time, it creates a penalty period based on the home’s value.
You can also avoid the time and expense of having to set up a Medicaid Trust.
Real-Life Example
Imagine a widowed mother who begins to experience cognitive decline. Her adult daughter moves in, quits her job, and spends two years helping her mother with daily activities. Eventually, the mother’s condition worsens, and she enters a nursing home. The daughter can demonstrate that her care allowed her mother to remain at home during those years. The home is then transferred to the daughter without penalty, and the mother qualifies for Medicaid benefits.
Common Pitfalls with Care Taker Child Home Transfer Exemptions
- Insufficient documentation – Medicaid will scrutinize the transfer. General statements like “I helped a lot” won’t suffice.
- Child moved in too late – If the child started living with the parent only a year before the nursing home admission, the exemption doesn’t apply.
- Incorrect timing – If the transfer is made after the Medicaid application is submitted, the exemption may not be honored.
How RK Law PC Can Help
At RK Law PC, we regularly assist clients in Medicaid planning, including structuring and documenting valid caretaker child transfers. We ensure:
- Proper legal documentation of the transfer
- Medical support to validate the level of care provided
- Compliance with Medicaid eligibility rules
We also help with irrevocable trusts, home transfers under other exemptions, and Medicaid application preparation.
For more information, please contact NYC Probate Litigation, Guardianship, Probate, and Estate Planning attorney Regina Kiperman:
Phone: 917-261-4514
Fax: 929-556-2089
Email: rkiperman@rklawny.com
Or visit her at:
40 Wall Street
Suite 2508
New York, NY 10005
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