Headed to, or Already in, a Nursing Home? It May Be Possible to Protect the Home Utilizing Medicaid’s “Two-Year Rule”

In most situations, transfers of assets that have taken place within five years of filing an application for “Nursing Home Medicaid” result in a penalty period, or period of Medicaid ineligibility based on the fair market value of the asset that was transferred (gifted). Since Indiana’s current penalty divisor is $6,682.00 (effective July 1, 2019 — this figure changes on July 1 each year), the transfer of a home with a fair market value of $100,000.00 would result in a penalty period of roughly 15 months. In other words, the Medicaid applicant would not be eligible for assistance to help pay for nursing home costs until the end of the 15-month penalty period.

There are several ways to protect the home and other assets. I will be focusing on the “Two-Year Rule” in this article; to learn about a few of the other ways to protect the home and other assets, check out my blog titled, “7 Asset Transfers Which Will Not Affect ‘Nursing Home Medicaid’ Eligibility” at www.EvansvilleAttorney.com.

A home may be transferred to a “caretaker child”, who is defined as a child of the Medicaid applicant who lived in the house for at least two years immediately preceding the applicant’s admission to the nursing home, and who provided care that allowed the applicant to avoid a nursing home stay during that period. Utilizing the “Two-Year Rule”, the home may not be transferred prior to the applicant’s admission to the nursing home.

Once the home has been transferred, Indiana Family and Social Services Administration (FSSA) must be immediately notified. FSSA will request written verification that the caretaker child did, indeed, live at the home for at least two years immediately preceding the nursing home admission. These verifications may include any or all of the following: a doctor’s statement claiming that the caretaker child provided substantial care which allowed his or her patient to remain at home during the two years preceding nursing home admission, tax records showing the caretaker child was residing at the address during the previous two-year period, driver’s license of the caretaker child, any bills (credit cards, utility bills, insurance bills, medical bills, etc.) showing that the caretaker child was receiving mail at the home during the two-year period, a written statement or Affidavit from the caretaker child explaining what services he or she provided during the two-year period.