How the Sibling Exemption Protects the Home and Helps with Medicaid Long Term Care Eligibility

Seniors can protect their home from Medicaid’s asset limit and Estate Recovery Programs by using the Sibling Exemption. Transferring their home to a qualified sibling using this exemption lets Medicaid Long Term Care applicants maintain their eligibility and keep their home safe as a family inheritance. This article covers the general concepts, rules and benefits of the Sibling Exemption.


What is Medicaid’s Sibling Exemption?

The Sibling Exemption is a way for a Medicaid Long Term Care applicant to transfer their home to a qualified sibling. Using the Sibling Exemption to make this transfer has two major benefits and doesn’t break any Medicaid rules.

To be qualified, the sibling can be biological or adopted, they can not be a foster or a step sibling. The sibling must have been living in the home with the senior for at least one year prior to the senior receiving Medicaid Long Term Care. Most often this would be full-time care at a nursing home, but it could also be be long-term care in the home or an assisted living facility. The sibling must also have an equity interest in the home, meaning they co-own the home with the applicant, to qualify for the Sibling Exemption. The home can be a single-family house, a condominium, a multi-unit (as long as the siblings both live there) or a mobile home. However, it must be the Medicaid applicant’s primary home, it can not be a vacation or secondary home.

Benefits of the Sibling Exemption

Benefits of transferring the home using a Sibling Exemption are:

  1. It keeps the home from counting toward the applicant’s asset limit without violating the Look-Back Period.
  2. It keeps the home protected from Medicaid Estate Recovery.

To qualify for Medicaid Long Term Care, applicants must meet two financial requirements – an asset limit and an income limit. Since Medicaid is intended for people with limited financial resources, these limits are generally very low and owning a home would put one well over the asset limit. But if full ownership of the home is transferred with the Sibling Exemption, the home would not count toward the applicant’s asset limit because the applicant would no longer own it.

Applicants can’t just give their home to someone else to keep it from counting against the asset limit. That would violate the Look-Back Period. In most states, the Look-Back Period is 60 months (five years). That means Medicaid will look back into an applicant’s financial history for the 60 months prior to their application date to make sure they haven’t given away any assets (including the home), or sold them at less than fair market value, to get under the asset limit. To learn more about the Look-Back Period, click here.

The other benefit of the Sibling Exemption, keeping the home safe from estate recovery, happens after the Medicaid Long Term Care recipient has passed away. Every state is required by law to try and collect reimbursement for funds it paid for Medicaid Long Term Care from the estate of deceased beneficiaries. Often the home is the most valuable asset in the estate, but if the home has been transferred to a qualified sibling, it is no longer part of the Medicaid recipient’s estate and will not be subject to recover. To learn more about Medicaid Estate Recovery, click here.

 Other Protections: The Sibling Exemption is not the only way to keep a home exempt from the asset limit or protect it from Medicaid Estate Recovery Programs. There are other exemptions specific to the home, like the Child Caregiver Exemption, and tools that can be used with any asset, like a Medicaid Asset Protection Trust. To learn more about protecting resources, click here.


Documentation Needed for the Sibling Exemption

Rules about the Sibling Exemption vary by state, but all states will require proof of home ownership. The sibling’s name on the deed or property title is the most straightforward form of proof. Some states also allow home ownership to be proven by canceled checks from mortgage payments, utility bills and home improvement or upkeep.

If the state requires proof of residency, the sibling can use a driver’s license, insurance policy, tax return, voter registration or some similar document that shows their address. Affidavits (written statements signed under oath) from neighbors or family members can also be used as proof of residency.


Sibling Exemption and the 3 Types of Medicaid LTC

There are three kinds of Medicaid Long Term Care relevant to seniors –Nursing Home Medicaid, Home and Community Based Services (HCBS) Waivers, and Aged, Blind or Disabled (ABD) Medicaid. The Sibling Exemption can be useful for seniors applying to any of those three programs because they all asset limits and beneficiaries of all three are subject to Medicaid Estate Recovery.

That being said, the Sibling Exemption is most commonly used with Nursing Home Medicaid. That’s because the Medicaid applicant will be leaving the home, which makes it more likely to be counted as an asset. Plus, nursing home care is very expensive, so the state may end up paying a lot of money to cover those expenses and will be looking for a large reimbursement through its Medicaid Estate Recovery Program. In most cases, the only way to collect that kind of reimbursement from the estate of deceased Medicaid beneficiaries is through their home, if they owned one.

HCBS Waivers or ABD Medicaid applicants probably won’t need to use the Sibling Exemption for eligibility purposes because they are likely to still live in their home while they receive Medicaid benefits through those programs, and in most cases the home is exempt from the asset limit if the Medicaid beneficiary is still living there. However, HCBS Waivers and ABD Medicaid applicants could use the Sibling Exemption to transfer their home to a qualified sibling to keep it safe from Medicaid Estate Recovery.

ABD Medicaid does not have a Look-Back Period, so ABD Medicaid applicants could simply transfer their home to a sibling (or anyone else) without using the exemption to get under the asset limit without violating the Look-Back Period and to protect the home from estate recovery. However, ABD Medicaid recipients may eventually need Nursing Home Medicaid or HCBS Waivers, and a home transfer without an exemption would make them ineligible for either program if they did it within the Look-Back Period.