When Moving Home To Care for Your Parents Saves the Family Home—and When It Doesn’t

At some point, many of us become aware that our parents, who acted as our caregivers and mentors throughout our lives, are now the ones who need to be cared for.

Whether they are dealing with illness, infirmity, or other issues that plague us in old age, one silver lining of moving home to care for them is that doing so might keep the family home in the family, rather than it being used as an asset to pay for long-term care.

This protection is called the caregiver child exemption, and it can shield your parent's home from Medicaid estate recovery—the process by which Medicaid recoups the costs of long-term care after someone dies. But this exemption only works if you meet very specific requirements. And according to some experts, it’s one of the most difficult exceptions to get approved by Medicaid. 

Get the timing wrong, fail to document your caregiving, or misunderstand what qualifies, and the home you sacrificed years to preserve could still be lost. Here's what you need to know about whether caregiving protects both your parents and your future.

How estate recovery and the caregiver child exemption work

When your parent needs nursing home care and uses Medicaid to pay for it, the state can seek repayment through a process called estate recovery—and the family home is typically the largest asset they'll go after once your parent passes. 

This can come as a shock to adult children who assumed the house would simply pass to them through inheritance. Instead, the state may place a lien on the property or require it to be sold to recover what Medicaid spent on your parent's care, potentially leaving you without the home you grew up in or the place where you provided years of care.

The exemption exists because providing this family care saves Medicaid money, and it functions as a reward for those who do so.

“The concept behind this exemption is, in my view, to incentivize or reward caregivers in the community,” says Dana Walsh Sivak, partner and chair of the Elder Law Practice Group at Falcon Rappaport & Berkman. “This allows parents to remain out of a nursing home for longer than they might otherwise, until they really, absolutely need to be in a nursing home.”

If you moved into your parent's home and provided care that allowed them to stay there longer, this exemption can protect the house from estate recovery. The house can pass to you, making you the outright owner, without the state making a claim against it—but only if you meet the specific criteria that prove you were truly acting as a caregiver.

The rules you absolutely must follow

There are some basic rules to follow if you want to qualify for this exception. 

You must have lived in your parent's home for at least two consecutive years immediately before they moved into a nursing home or began receiving Medicaid-covered care. It’s not two months, or 20 months, but a full two years. Taking a break in the middle resets the clock. Visiting regularly, even daily, also doesn’t count—you need actual residency. You can't qualify by moving in after your parent is already in a nursing home, no matter how much you helped before.

Additionally, simply living with your parent isn't enough—your caregiving must have prevented or delayed institutional care. This typically means helping with activities of daily living: bathing, dressing, feeding, mobility, managing medications, and more. The key question to ask: Without your care, would your parent have needed nursing home placement sooner? If you were just sharing housing, or if professional aides did the hands-on care, you likely won't qualify.

On top of that, you'll need to document everything to prove you lived there and provided necessary care. Without documentation—including a care journal, evidence of residency, letters from your parent’s doctors, videos and photos of care—even dedicated caregivers lose their cases simply because they can't prove what they did.

“This need for nursing home-level care must be verified by the parent's physician and by two independent witnesses in most states,” says Evan Farr, certified elder law attorney at Farr Law Firm, P.C.

Even beyond these rules, there are other things to keep in mind that can trip you up.

“The child cannot be paid in any way for the care during this two year period,” confirms Farr. “There can't be two children providing the care, it must be just one child. It can't be a grandchild or any other relative. They can't be passing mom back-and-forth between households, as that means there is more than one caregiver.”

All of these stringent rules are why, Farr says, “There is so much misinformation out there about the caregiver child exemption. … Apparently there are tons of articles out there that make this exemption sound easy, but in fact it's one of the most difficult exceptions to get approved by Medicaid.”

The steps you can, and should, take now

If you're currently caring for a parent or considering moving home to do so, you’ll need to immediately take steps to potentially protect your family and your home. 

For one, ensure you’re following all the rules above: Start documenting everything you do as a caregiver, get a doctor on board with affirming that your care allows your parent to remain at home, and update your information such as your driver’s license to show you are truly living there. 

On top of that, be sure to learn your state’s specific rules: Contact your state Medicaid office or check their website for exact requirements. Don't assume federal guidelines or general online advice covers your situation.

And it’s always good to get legal help. Consult an elder law attorney before your parent enters a nursing home. An attorney can help you build a stronger case, especially if your situation involves complications like preexisting residency, shared caregiving, or unclear timelines.

Know that there are no guarantees

The prospect of caring for a parent while protecting the family home is undeniably appealing. 

"In cases where the 'family home' is one where the children grew up and have a lifetime of memories and sentimental attachment to the home, knowing it can be kept for the foreseeable future can be a great relief to elderly individuals and their families who are already coping with a great deal of change and transition,” says Sivak. 

But even with meticulous planning and documentation, you still may not qualify. Medicaid makes the final determination about whether your parent truly required nursing home-level care during those two years.

“Even if you get the required medical certification and the independent witness certifications, there is still always a chance that Medicaid may look at the documentation and decide that they don't agree the person needed nursing home-level of care during that two-year period,” says Farr. “This is always a subjective determination that needs to be made by Medicaid.”

That uncertainty doesn't mean you shouldn't try. It means you should document thoroughly, consult with professionals early, and understand that the caregiver child exemption is a valuable possibility—not a guarantee.