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Parent will need Medicaid. Daughter has borrowed over $4000 with a promise to pay back to father. She now claims part of it was a "gift" which I know is not true and says that receipts are being kept of items that are being purchased for father, which I have never seen, nor the "items". I am the financial POA and getting closer to parent's need for medicaid. He is in a nursing home now. Who is responsible should there be a penalty?

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Shame on your sister
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Many people think that gifting money prior to going on Medicaid will cause the heavens to open up and lightening bolts to reign down upon the person giving the money and the person receiving the money but this is a myth.

Your dad is allowed to give a cash gift but Medicaid has the option of declaring that gift (depending upon how much it was) as part of his care. What that means is Medicaid can see that your dad gifted $4000 to your sister and can declare a period of ineligibility based on that $4000. If your dad needs to go into a NH the amount of assets he gave away ($4000) would have to equal one month of nursing care. So let's say that one month in a nursing home is $4000 (I'm using this number for the sake of the example). Your dad wouldn't be eligible for Medicaid for that first month. Does that make sense? Someone had to explain it to me a few times before I understood.

There are a lot of misconceptions about Medicaid, a lot of people are very wary of it and terrified of penalties and a parent not being eligible. You won't receive a penalty per se but if your dad is at the threshold of a NH he may not be covered, under Medicaid, for one month based on the money he gifted. Whether your sister pays it back isn't relevant to Medicaid.
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You may know it is not true, but if Dad didn't get it in writing, you have no recourse to sue her. Unfortunately the POA is left with the responsibility of safeguarding the patient's assets.
Medicaid does not care who is responsible. They just don't pay the freight.
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If your sister really did spend some of the money on Dad's care, encourage her to come up with the receipts, to lessen the amount that will be considered a gift and therefore lessen the potential penalty.
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