How can my mom pay me $15,000 she borrowed with out affecting her Medicaid?

1 answer | Last updated: Oct 04, 2016
A fellow caregiver asked...

How should my 97 year old mother pay me $15,000 she borrowed from me. If she gives it to me as a gift-your website says she would not be able to collect Medicaid.

Expert Answers

Your mother can repay you the money she borrowed from you without it affecting her chances for Medicaid nursing home eligibility. The rule you're worried about has two parts to it. First, when someone applies for Medicaid coverage of nursing home care, the Medicaid program looks at the applicant's income and assets to see if they are low enough to meet the state's specific limits. Second, in considering an applicant's current assets, Medicaid also looks at financial transactions over the previous five years. If the applicant has given away funds during that time, for the purpose of lowering assets enough to qualify for Medicaid nursing home coverage, Medicaid might delay that person's eligibility, the length of the delay depending on the amount given away and the cost of nursing home care in the state.

However, this rule about giving away assets does not apply to repaying a loan, because paying off a loan or other debt is not a "gift". The key for you and your mother will be to show some kind of paperwork that proves that the money she's giving you now is to pay off a real loan. That proof would include anything that shows the original loan, including a cancelled check, a bank statement (yours or hers), or any other written evidence from the time of the loan, showing that you did actually lend her this amount of money.

If and when your mother repays you, she should also make it clear on the payment itself, as well as in an accompanying letter, that this money is to repay a loan you made to her on such-and-such specific date. You should also provide her with a written response -- a kind of receipt -- indicating that you have received the money in repayment of the loan, specifically referring to the time and amount of the original loan. Then keep all these papers together, so that you'll be able to show them to the Medicaid program if and when your mother winds up applying for Medicaid nursing home coverage.