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?
No, Medicaid cannot take back money you gifted to someone, but gifting money may cause her to be penalized with a period of Medicaid ineligibility. This is because Medicaid has a look back rule (discussed below) to discourage long term care Medicaid applicants from gifting money (and other countable assets) to meet Medicaid’s asset limit. (To be eligible for long term care Medicaid, an applicant must have assets under a specific value. At the time of this writing, it is generally $2,000. To see state-by-state asset limits, click here).
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. (Please note that California only has a 30-month look back period, and beginning October 1, 2020, New York’s Community Medicaid, the program that provides long term home and community based services, will have a 30-month look back period). If it is discovered that the Medicaid applicant (or even his / her 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.
Again, Medicaid will not go after the person that you gifted money to in order to take it back (in this case, your children). However, if you have gifted money and are penalized for violating Medicaid’s look back rule, it might be in your best interest to recoup the money from the person to which it was gifted. This is because if you are able to recoup the money, the Medicaid agency might withdraw the penalty period, or even if you are only able to partially recoup the money, your penalty period might be shortened.