Short Answer

North Carolina Medicaid uses a 60‑month (5‑year) lookback for long‑term care services. Any gifts or below‑market transfers by the applicant or spouse during that window can trigger a penalty period—time when Medicaid will not pay for long‑term care—calculated by dividing the total uncompensated transfers by the state’s average private‑pay nursing home rate. Certain transfers (for a spouse, a disabled child, or in narrow home‑related exceptions) are exempt, and returned gifts can shorten or eliminate a penalty.

Understanding the Problem

You want to know whether gifts or deeding part of a home will affect North Carolina Medicaid eligibility for long‑term care. The key decision point is whether the applicant (here, your parent) made gifts or below‑value transfers within the 5‑year lookback the county Department of Social Services reviews when you apply.

Apply the Law

Under North Carolina Medicaid rules, the county Department of Social Services (DSS) reviews transfers made by the applicant or spouse during the 60 months before filing for long‑term care Medicaid or certain in‑home waiver services. Uncompensated transfers in that window create a penalty period. The penalty equals total gifts divided by the state’s average private‑pay nursing facility rate and generally begins only when the applicant is otherwise eligible and receiving, or approved for, long‑term services. Transfers to a spouse, a disabled child, or qualifying caregiver/sibling situations for the home may be exempt; details are fact‑specific. After death, North Carolina may pursue estate recovery for correctly paid benefits through a probate claim.

Key Requirements

• Lookback window (60 months): DSS reviews all asset transfers by the applicant or spouse in the 5 years before applying for long‑term care Medicaid or certain home‑ and community‑based services.
• Covered transfers: Gifts or below‑market transfers (cash, real estate, forgiving loans, adding someone to title without fair payment) are counted unless an exception applies.
• Penalty calculation: Total uncompensated value divided by the state’s average private‑pay nursing home rate yields months of ineligibility; the penalty generally starts only once the applicant is otherwise eligible and needs long‑term care.
• Common exemptions: Transfers to a spouse; to a blind/disabled child; narrow home exceptions (e.g., certain caregiver‑child or sibling with equity scenarios) if strict criteria are met.
• Estate recovery after death: NC DHHS can file a claim in the probate estate for Medicaid paid; it is treated with a defined priority in estate administration.

What the Statutes Say

• Federal Medicaid, 42 U.S.C. § 1396p(c) (Asset transfers and lookback) – Sets the 60‑month lookback and penalty rules for uncompensated transfers.
• North Carolina Gen. Stat. § 108A‑70.5 (Medicaid Estate Recovery) – Authorizes the State to seek recovery from the recipient’s estate for certain benefits.
• North Carolina Gen. Stat. § 28A‑19‑6 (Order of claims in estates) – Sets priority for creditor claims, including the State’s Medicaid recovery claim.

Analysis

Apply the Rule to the Facts: Because your parent owns a home and you are considering gifts or a deed change, any transfer for less than fair value in the last 60 months can trigger a penalty. A deed like an enhanced life estate (Lady Bird) may pass the home outside probate—potentially limiting estate recovery later—but can still be treated as a transfer of a remainder interest during the lookback unless a narrow exception applies. Paying for care or expenses at fair market value is not a gift; outright gifts or forgiving “informal” loans generally are.

Process & Timing

1. Who files: The applicant or authorized representative. Where: Your county Department of Social Services (DSS) in North Carolina or online via ePASS. What: Long‑Term Care Medicaid application with proof of income, resources, and 60 months of financial records. When: File when care is needed; expect DSS to review the prior 60 months for transfers.
2. DSS verifies assets and scrutinizes transfers. If it finds uncompensated transfers, it calculates a penalty by dividing total gifts by the State’s average private‑pay nursing facility rate. Processing times vary by county; allow several weeks to a few months.
3. DSS issues a written decision. If a penalty applies, the notice states the months of ineligibility. You may shorten or eliminate it by documenting fair‑value payments, proving an exemption, or returning transferred assets. If benefits are later paid, DHHS may file an estate claim after death through the probate process.

Exceptions & Pitfalls

• Exempt transfers: Transfers to a spouse; to a blind/disabled child; limited home exceptions (e.g., a caregiver child who lived in the home and provided care long enough to delay institutionalization, or a sibling with an equity interest). These are technical—get advice before relying on them.
• Lady Bird deeds: May avoid probate‑based estate recovery because the home passes outside the estate, but they can be treated as a transfer during the lookback unless an exception applies. County practices vary; evaluate timing and facts carefully.
• Caregiver agreements: Paying a family member for care must be under a written, pre‑existing agreement at fair market rates with detailed logs; otherwise payments can be treated as gifts.
• Loans and notes: “Loans” to family must be documented, actuarially sound, and enforceable; informal advances are often treated as gifts.
• Return of assets: Returning all or part of a gift can cure or reduce a penalty; provide proof promptly to DSS.
• Estate recovery: After death, DHHS can file a probate claim for correctly paid benefits. In North Carolina, that claim has a defined statutory priority. The personal representative should send formal creditor notice to DHHS to run the claim period, and DHHS can ask the court to appoint a public administrator to sell estate real property if needed.

Talk to a Estate Planning Attorney

If you’re weighing gifts or deed changes while planning for North Carolina Medicaid long‑term care, our firm can help you understand the lookback, penalties, and recovery risks. Call us today to discuss your options and timelines.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.