The Child Caretaker Exception

Most states have a child caretaker exception to their Medicaid transfer rules.  An elderly parent can transfer their home to an adult child who lived in the home with their parent for the two years prior to that parent entering into a nursing home. Such a transfer of the home would not violate Medicaid look-back rules.  The child must have provided care to that parent that allowed the parent to remain in the home for those two years, instead of the parent needing institutionalized care during that time.  A child, for the purposes of this rule, must either be a biological or adopted child.  Other relatives – stepchildren, grandkids, nephews, etc. – do not qualify. The purpose of this rule is to help keep elderly folks out of a nursing home for as long as possible. 

The rule stems from 42 U.S.C. § 1396p(c)(2)(B)(iii), which provides:

“An individual shall not be ineligible for medical assistance by reason of paragraph (1) to the extent that—

(A) the assets transferred were a home and title to the home was transferred to—

(iv)  a son or daughter of such individual (other than a child described in clause (ii)) who was residing in such individual’s home for a period of at least two years immediately before the date the individual becomes an institutionalized individual, and who (as determined by the State) provided care to such individual which permitted such individual to reside at home rather than in such an institution or facility;”

In a recent case out of Massachusetts, Coko v. Tsai, the court analyzed what evidence should be sufficient to prove a child caretaker exception case.  Coko was an elderly woman who transferred a life estate in her home to her daughter who had lived in the home and cared for Coko for at least two years before Medicaid was needed.  Coko applied for Medicaid and was denied benefits for a certain amount of time due to the transfer.  Coko took her case before a hearing officer and presented evidence to prove the child caretaker exception, including copies of deeds, medical records, an elderly services records review, and affidavits of herself and her daughter. Unfortunately, the hearing officer upheld the denial of benefits.  Coko appealed to a trial court.

The trial court in this case found that the evidence to establish the child caretaker exception was in the record.  The trial court noted that the hearing officer did not discuss the evidence in their decision; the hearing officer did not express what evidence they found credible or what evidence they found was an attempt to skirt Medicaid rules.  The trial court stated that it seemed as if the hearing officer had an intent to deny the case and did not consider the evidence.  In addition, the trial court stated that even though it was local custom to provide a doctor’s note as evidence for a child caretaker exception, this documentation was not statutorily required and so did not have to be remitted in order to prove the case.

So, the lessons from this case are twofold:  a denial opinion from a hearing officer should discuss the evidence offered in the case and a doctor’s note is not required to prove a child caretaker exception case in Massachusetts.

Turning to more general terms, let’s take a look at what evidence some attorneys might choose to offer in a child caretaker exception case:

1. The first element in a child caretaker exception case is to prove that the child lived in the home for at least two years before the parent was institutionalized. Possible evidence to offer includes:
   1. Driver’s license records
   2. Voter registration records
   3. Tax returns
   4. Utility bills
   5. Affidavits

2. The second element in a child caretaker case is to prove that the child provided care to the parent that kept the parent out of an assisted living or nursing home facility. Possible evidence to offer includes:
   1. A written record of events over the two years that would have resulted in institutionalization, if not for the child caretaker’s assistance
   2. Medical records
   3. Statements by friends, family, or neighbors that corroborate the care
   4. Affidavits of the parent and child
   5. Care log of the care the child provided
   6. Doctor’s note
   7. Documentation from an institution stating that the medical conditions of the parent would likely require institutionalization

Some states, like New Jersey, have attempted to add a requirement to the child caretaker exception - that the child is not able to work outside of the home in order to qualify.  However, these additions to the federal rule have been litigated and New Jersey is backing off this requirement. 

The child caretaker exception can be a powerful planning device in elder law.  Often, care is already being provided by a child who lives in the home.  Knowing when this exception applies, and what evidence to offer, can be a great tool for elder law attorneys.