Each year, may parents move into a child's home, which often creates excellent planning opportunities for the parent. However, caution must also be taken to ensure that the arrangement does not inadvertently disqualify the parent from receiving Medicaid in the future.
The first problem that arises is when the parent pays money directly to the child for rent or caregiving services without a written agreement, or an agreement that pays too much to the child. The DPW may honor such payments if they are made pursuant to a written agreement, but it must be made in advance of such payments. The more common problem occurs when parent and child attempt to “split” certain costs and the parent makes numerous direct payments to his or her child. These payments, while very legitimate, may be later treated by the DPW as gifts that cause Medicaid ineligibility. Advice from an attorney is needed.
The most difficult issue arises when children make home improvements to allow a parent to live in the home, but the parent pays the child directly for such improvements, or they are performed without the advice of an elder law attorney. While reasonable home modifications may be allowed, the family must be careful about how the payment arrangement is made to avoid ineligibility for Medicaid later.