Last week we were discussing Susan’s mistake of confusing Medicaid’s exempt asset rules vs. the transfer of assets rules. Mom transferred her home to Susan 4 years ago and now needs Medicaid. If she applies now there will be a Medicaid penalty, a period of ineligibility. There are, however, exceptions to this rule.
I asked Susan if she had been deemed disabled by Social Security at the time of the transfer. Transfers to a disabled child are an exception to the transfer rules and carry no penalty. Susan told me she was not disabled. She has a full time job.
I then told Susan that there is another exception that permits the transfer of the home to a child who has lived with the parent for at least 2 years and provided nursing home level care to the parent during that time. Susan immediately perked up when she heard that. “I’ve been caring for Mom longer than that,” she told me.
“Well, not so fast,” I said. “You must have provided a level of care such that, if you weren’t administering it Mom would have needed to be in a nursing home.” Susan told me that she works 9 to 5, leaving Mom at home alone, but cares for her the rest of the day and overnight. I explained that if Mom really needed nursing home level care she could not have been left home alone. You must show that she needed 24/7 round the clock care.
I have had many children ask me about this exception, but usually after the fact, meaning, just as in Susan’s case, after the home has already been transferred. The State will scrutinize this exception very closely. You must establish at the beginning of the 2 year period that Mom needs nursing home level care. It is a good idea to get an examination and written opinion from a physician. You must also establish that you, the child, are providing nursing home level care. The biggest problem there is when the child tells me that while he works during the day, he takes care of Mom at night. Think about it. That won’t work. Nursing homes don’t leave their residents unattended for 8 to 10 hours a day. So that won’t fly with Medicaid.
Susan wasn’t thrilled with the answers I gave her and I knew what her next question would be. “So, what do I do now,” she asked. “Mom needs nursing home care and she has no money.”
“You’ve got another 12 months to go before the home transfer falls outside the 5 year Medicaid lookback,” I told her. I then went through some options. She could transfer the home back to Mom, undoing the transfer and apply for Medicaid. She could keep Mom at home and pay for her care for a year and then apply for Medicaid. Another option is to sell the home and use some of the proceeds to pay for Mom’s care in the nursing home for a year until Medicaid eligibility.
Which option is the best would be dependent on the cost of each and Susan’s ability to pay and whether it is safe for Mom to remain at home. I also cautioned Susan that while we were focusing on the home transfer there could very well be other transfers during the past 5 years that could trigger additional penalties. I suggested that we conduct a review of Mom’s financial records now to determine any other problems and fix them now, before any application is filed. Susan readily agreed.