Transferring your home to someone will make you ineligible for Medicaid benefits for up to five years following the transfer. However, there’s an exception for which a relative may qualify it is known as the "caretaker child" exception, if your child can show that they lived with their parent for at least two years before they enter a nursing home and during that time provided sufficient care to their parent at home for at least two years, then the usual Medicaid penalty for transferring the home does not apply. In some cases, a letter from a doctor regarding the care provided by your sister will satisfy the Medicaid agency.
Without planning properly, a client will start receiving Medicaid benefits and upon their death, Medicaid places a claim to the home for reimbursement to the state for whatever payments Medicaid made for her care. The transfer to a caregiver child would protect against this claim.
The possible downside of this plan is that the home goes to only one child. If there are other children that the parents want to leave their home to they would have to utilize other legal tools to protect the home and keep Medicaid benefits. Planning at least five years before you need Medicaid provides you the most flexibility to keep all of your assets and also qualify for Medicaid.