There have been significant changes to Medicaid rules and one is the extension of the so called "look back period" rule. In this rule, the government can look back five years from when the individual applied for Medicaid long term care benefits assistance (42 USC 1396 and 1396p).
The result is that anyone who adds the name of another individual to his or her deed, other than a spouse, within five years of applying for Medicaid assistance, will be ineligible for a lengthy period of time beginning on the date the person would have otherwise been eligible for Medicaid assistance.
Special Home Exemption Rule
It's often the case that a daughter will move in to take care of Mom or Dad or both. In this case Medicaid has a special leniency rule to allow transfer of the home to the daughter and not result in a penalty for a transfer for less than value. If the child provides care for a parent in a parent's home for at least two years, and that care kept the recipient out of a nursing home, the property can be transferred to the child without penalty and the property will not be a subject asset for Medicaid recovery. Medicaid will require some proof of this. Typically an affidavit from a third-party care provider such as a doctor or an agency stipulating that the care was given for at least two years and resulted in keeping the care recipient out of a long-term care facility, will be sufficient evidence. It's important to use a legal adviser to make sure you do this properly.
Some states, in estate recovery, only go after property that goes through probate. Property titled in joint tenancy with rights of survivorship passes at death to the living tenant and avoids probate. If the title is in joint tenancy or held in trust and the joint tenant or beneficiary, at death, changes title before the state files its lien then the state could have no legal claim against the property.
On the other hand, state recovery does not go after property itself but simply requires repayment of Medicaid costs based on assets a Medicaid recipient held prior to applying for Medicaid. The family is responsible for coming up with the money based on the value of the assets. It's very likely, however, in most states that property passing in joint tenancy will simply escape Medicaid recovery or assessment because recovery services may not even be aware of the death of the care recipient until the property has passed in ownership. At that point it could become a legal challenge between state recovery and the family and possibly for bad publicity the state may forgo any further legal action. On the other hand, as Medicaid budgets become stretched, states may become more aggressive in recovery tactics that the law allows them.