Definition: Medicaid Sibling Exemption
The sibling exemption / sibling exception allows seniors to transfer their primary home to a brother or sister without jeopardizing their Medicaid eligibility. Medicaid has a look back rule in which Medicaid reviews all asset transfers within a specified period immediately preceding one’s Medicaid application for long-term care. This is done to ensure no assets were gifted or sold under fair market value. The look back period is 60-months with two exceptions. California has a 30-month “look back”, and New York is implementing a 30-month look back rule no earlier than March 31, 2024 for Medicaid long-term home and community based services. If a “disqualifying transfer” was made during the look back period, a penalty period of Medicaid ineligibility will be established. Transferring one’s home, with very few exceptions, such as the sibling exemption, is a violation of Medicaid’s look back rule.
How Does the Sibling Exemption Work?
To qualify for the sibling exception, the sibling must have an equity interest in the home. This means the sibling is part owner of the home, with the siblings sharing ownership. In general, proof of equity interest might include a deed (a legal document) indicating ownership, cancelled checks / money orders showing payments for mortgage and / or utilities and / or taxes, or proof of payments for home upkeep / improvements. Based on the state in which one resides, proof of equity interest may vary. For instance, in New York, equity interest is defined by the ability to receive a portion of the proceeds if the home were to be sold. Evidence of this is the individual’s name on the property title.
The sibling must also have lived continuously in the home for a minimum of one year immediately preceding the institutionalization of the other sibling.
The term “institutionalized” can be a bit misleading. While it does encompass persons who are nursing home residents and persons residing in a medical treatment facility who require a nursing facility level of care, it also includes persons who receive home and community based services (HCBS) via a 1915(c) HCBS Medicaid Waiver. This means that the individual may continue to live at home with Medicaid-provided long-term services and supports. Persons may also live in adult family care homes (adult foster care) or an assisted living residence.
When the above conditions are all met, the full title of the home can be transferred to the non-institutionalized sibling, giving that sibling full ownership of the home without jeopardizing the other sibling’s Medicaid eligibility. Note that the home can be transferred before or after Medicaid eligibility has been established. Either way, if all the conditions of the sibling exemption have been met, the transfer of the home will not impact Medicaid eligibility.
A sibling can be a biological or adopted sibling of any age. It is unclear if a step-sibling qualifies.
Are there Monetary Limits / Maximums to the Home’s Value?
While all states have a home equity interest limit for long-term care Medicaid eligibility (nursing home Medicaid or home and community based services via a Medicaid waiver), it is thought that there is no home equity limit when a home is transferred to a brother or sister via the sibling exemption. Home equity is the value of one’s home minus any home debts, such as a mortgage. Home equity interest is the amount of home equity that is owned by the Medicaid applicant.
If one is trying to establish Medicaid eligibility first, and the applicant sibling’s interest in the home is over the state’s home equity limit, this becomes an issue. To see home equity limits for Medicaid eligibility by state, click here.
It is thought that there is no maximum equity interest in which a non-institutionalized sibling must have in the home. It is recommended one consult with a Medicaid planning professional in their state for confirmation.
Are the Sibling Exemption Rules the Same in All States?
While there are no substantial differences between states in regards to the sibling exemption, there may be slight variations based on the state in which one resides. As mentioned above, NY requires that the brother or sister be on the property title, and therefore, would receive a portion of the proceeds if the home were sold. Prior to transferring a home to a sibling, one should verify the state rules of the sibling exemption in their state. Without the proper knowledge, one may unknowingly make a disqualifying transfer, jeopardizing their long-term care Medicaid eligibility.
Is Professional Assistance Needed in Order to Utilize the Sibling Exemption?
It is always best to seek the counsel of a professional Medicaid planner prior to transferring one’s home to a sibling. While the sibling exemption may sound fairly straightforward, one runs the risk of long-term care Medicaid ineligibility if the criteria and rules in one’s state are not followed. Find a Medicaid planner.