medicaidplanner Staff asked 4 years ago
My mom gave money to several of my children. Now she needs to apply for Medicaid. Can Medicaid take back the gifted money from my children?
medicaidplanner Staff answered 4 years ago
No, Medicaid cannot take back gifted money, but gifting money may cause your mom to be penalized with a period of Medicaid ineligibility. This is because Medicaid has a Look-Back Rule to discourage long-term care Medicaid applicants from gifting money (and other countable assets) to meet Medicaid’s asset limit. See state-by-state asset limits.
Due to Medicaid’s Look-Back Rule, upon submission of a long-term care Medicaid application, the Medicaid agency “looks back” at all asset transfers that have been made within 60-months of the date of one’s application. If it is discovered that the Medicaid applicant (or their spouse) has gifted assets or sold them for less than fair market value within the Look-Back Period, the Medicaid applicant will be penalized with a period of Medicaid ineligibility, even if the gifts were not given with the intention of hiding the money from Medicaid.
While Medicaid will not go after the person that was gifted money, if one is being penalized for violating Medicaid’s Look-Back Rule, it might be in their best interest to recoup the money from the person to which it was gifted. If one is able to recoup the money, the Medicaid agency might withdraw the Penalty Period, or even if one can only partially recoup the money, the Penalty Period might be shortened.