Challenges to the Caregiver Exemption

By Brittany A. Verga, Esq.

The child caregiver exemption is an important exception to the five year lookback rule in Medicaid planning. For many years, it has allowed children to retain the homes of parents for whom they have provided long-term care. However, the ability to qualify for this exemption is being severely limited.

The New Jersey Appellate Division recently held that Medicaid’s child caregiver exemption is inapplicable when a child’s care for his or her parent is ancillary to Medicaid-funded homecare. Estate of G.B. ex rel. M.B.-M. v. Division of Medical Assistance and Health Services, (N.J. Super. Ct., A.D., No. A-5086-12T1, Sept. 15, 2015).

Under the caregiver exemption, an institutionalized individual may, without penalty, transfer his or her equity interest in a home to a son or daughter: (1) who was residing in the home for a period of at least two years immediately prior to the parent’s institutionalization and (2) who has provided care, thus permitting the parent to remain at home rather than enter an assisted living or nursing home facility. N.J.A.C. 10:71-4.10(d)(4).

In Estate of G.B., the Director of the Division of Medical Assistance and Health Services imposed an asset transfer penalty after an in-home Medicaid recipient, G.B., sold her residence to her caregiver daughter for less than fair market value. At the time, G.B. received thirty (30) hours of in-home caregiver services per week in addition to her daughter’s care. The homecare rendered G.B. the legal equivalent of an institutionalized person. The Director explained that the caregiver exemption permits child caregivers to keep the home because they provide care, which prevents Medicaid from funding long-term care services for at least two years. The Director found that Medicaid assistance, rather than the daughter’s care, was the key factor that allowed G.B. to remain in her home and avoid placement in an institution. Therefore, G.B’s daughter was not entitled to the caregiver exemption. The Appellate Division affirmed the Director’s decision, finding that the record supported the ultimate conclusions of law.

Begley’s Blog welcomes our newest columnist Brittany A. Verga, Esq.  Brittany is an associate in our Trusts and Estate Department as well as Business and Health Care groups.  We look forward to many more contributions like this one.


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