Can we spend down Medicaid by paying family for cleaning out the house?

OhioGal: I'm with the others here, which means you have to be really careful the money for the brother's work is NOT called gifting because Medicaid will deny. Just to be sure, you may want to hire an elder law attorney to draw up the correct document(s).

Most definitely document everything . .cash would result in question from medicaid..at least checks can follow explanations along with supporting documentation to avoid any penalties

It is gifting if he ever applies for Medicaid and there is no record of the money being declared as income for the folks providing services. If you don't ever file for Medicaid, the "handsomely" done payments can cause a transfer penalty. It's usually a better idea to come up with a caregiver agreement or a share of expenses for the person receiving care. Medicaid doesn't expect them to live for free, but money given to family that isn't declared as income IS a gift.

My dad lives with me, but anytime someone in the family does somethinh for him such as wash his clotjes, clean up his room, paint, clean carpets, male his meals, etc. he pays us (handsomely) for these services. Is this considered gifting? I don’t think so. He doesn’t pay rent to me and feels that this compensated for his stay at my house. Is this wrong?

Confused, why would you be spending down Medicaid? If he qualifies for Medicaid they must already have seen his financial situation. Tread carefully

Even if you pay in cash, do they not go through the account; they did with my dil's grandmother and good thing she was doing checks to document what she'd done with the money

Questionable at best. Consult with Medicaid and an Elder Attorney first.

Have brother prepare and present a bill that mom will pay. The amount charged can be equivalent to what other businesses would charge. He then would have to pay taxes on that amount via a 1099 from mom. Check with either an elder law attorney or CPA on how best to handle it.

For my mother we just provided medicaid with the receipts for whatever mom "paid" us. Ie, we took a trip with her and she paid us a third of the cost of gas and hotels and food. So I'd say as long as the brother writes up a receipt for cleaning it would work. Get with the medicaid rep and ask. That's what we did.

You can have your brother either incorporate or fill out the form to become a sole proprietor with a clean out business. Then pay him whatever you would pay an outsider, but make sure everything is documented in the form of a contract for services. He will have to declare the money as income but he can deduct his mileage, cleaning equipment and supplies, self employment taxes. And, he can put the money into a SEP IRA and deduct that as well. He should discuss this all with his tax guy to maximize deductions.

Cwillie is correct. All money given to family, even if in exchange for services, is considered a gift by Medicaid and will be penalized. HOWEVER, if it is first prescribed by a formal contract, taxes withheld, and disclosed to Medicaid at the initial application, it will be excluded rather than penalized.

As far as I know any money given to your brother will be considered a gift in the eyes of Medicaid. Unless your brother has his own business doing this kind of thing. What we did was to pay our family members with CASH ONLY from our father's account and keep withdrawals to a minimum. No checks, etc. No money trail. Good luck.

There's probably an actual amount that is allowable by law. Similar to paying the executors of an estate.

I agree with cwillie--make sure it's all documented, esp with Medicaid involved.

It would all have to be above board - written contract and brother claiming the income - otherwise I'm pretty sure it would be fine.