How does Medicaid look back repayment work?

Indeed Medicaid views the gift as one that must be reported if Grandma applies for Medicaid within 5 years of that gift. If so, there will be a penalty period equal to the amount of the gift divided by the state "penalty divisor," which varies from state to state, but is roughly equal to the average cost of a shared room in your state's nursing homes.
So as you can see, only the "lookback period" of 5 years applies to gifts, not "estate recovery,'' which is when the state wants to be repaid after a Medicaid recipient's death.

Unofficially, the ownership of the house has nothing to do with it. What counts is that Grams gifted him the down payment within five years of her applying for Medicaid. If the gift was, say, $25,000, then she (or someone) has to pony up that much money in "self pay" care at the nursing home before she gets any bennies. Prior to about November 2007 gifts would "amortize" at the rate of nursing home care a month at a time prior to grams going on Medicaid but that is a long-gone procedure. States vary on details, but this is the main thrust of it.

Grace + Peace,

Bob

Oh, I forgot...not only does grams have to self pay the nursing home for the amount she gave to the young'un for the house, but she must APPLY for Medicaid before the commencement of the self pay...
Grace + Peace,

Bob

Not to argue, but it won't hurt, and will likely help to apply for Medicaid before entering nursing home and then even if denied for a period of time, her foot is in the door and can then spend down as may be required with Medicaid being aware with what she is doing.

Parallel topic although off topic from the thread: many folk believe that if a married couple has one healthy person, say dad, and one that needs nursing care, which would be mom in my example, that if you "divide the money" and spend mom's half on her care that then she will be ok'd for medicaid and dad gets to keep his "half." Not True..Let me make that NOT TRUE. There is a half a loaf possibility but you will require an elder care atty to handle it as it is complicated. Presently the healthy spouse gets to keep UP TO about $120K in countable assets plus the house and a vehicle, and the spouse who applies for Medicaid must have no more than $2000 in countable assets. That is a very broad oversimplification, but it is the gist of it.
The key is don't spend down before applying for Medicaid. There is much, much more to it, but just saying again: costs nothing to apply for Medicaid and then in any situation, at least your foot is in the door.

Grace + Peace,
Bob

OldBob nailed it.

They'll want the money now in "self pay", not at her death, at least in our state. Plus, there's could be a penalty - in our state, that effectively doubles the amount of the gift in what your grandmother would have to "self pay."

Check with an elder law attorney in your area to see if there is a way out of this for your grandmother. The grandkid may have to buy the house immediately at fair market value, but that's just speculation. Check with a lawyer.

You don't have to wait for grannie to die to deal with Medicaid. Grannie is not going to be eligible for medicaid from the get go. The downpayment will be viewed as gifting and a transfer penalty issued against grannie which means NO Medicaid approval to begin with. Its the $ that is the penalty not whatever it paid for downstream. You may be getting transfer penalty confused with estate recovery (MERP) which is an after death process on elders assets.

. Grannie -since she gifted $ & is now impoverished - will meet the financial qualification for Medicaid (usually 2k in non exempt assets & 2k income) but will be ineligible for Medicaid to pay due to transfer penalty.

Penalty has an equation based on whatever your state pays facilities as the Medicaid day rate for room & board. As Medicaid is uniquely administered in each state, this amount varies by state. Like TX is roughly $ 155.00 a day, so Olde Bobs 25K = 161 days of ineligibility.

The ? then becomes do you clear the living room out or your sons old bedroom out to make it grannies room for the next 5 1/2 months???

OldBob - my thought was based on the OP....If Genelegal1 mom gifts $$$ to grandson so is probably now impoverished, then grannie has no $ to private pay. There is no spend down as there is no $. Genelegal1 will have to private pay for her mom to stay in the NH to begin with. Painfully expensive.

When hubs applied for Nh for his mom, she had slightly over 2k in the bank. The medicaid caseworker for the NH, refused to take the application as it would be denied. Instead she was to spend down ASAP to get her next bank statement to under 2K & then turn in application with a new date & could be approved & retrod to day 1 of NH admission. NH ok with this too. What he was told was that a denial triggers all sorts of other compliance to be done & a denial with subsequent spend down & it's reporting was to be avoided if at all possible. individual Medicaid financial, although with reams of paperwork is pretty straightforward....you have to be impoverished, within 2K non-exempt assets& within whatever allowed for income.

Couples Medicaid is awhile otherbstory & imho really calls out for experienced legal & planning from a NAELA level atty as it can be quite complex to maximize the community spouses options. Yeah there are some things they can do on their own - (like changing life insurance beneficiaries from each other to kids or grandkids) - but doing creative, like medicaid compliant SPIAs (& this coming from someone who usually hates, hates, hates annuities but SPIAs can be ideal quick fix for a healthy younger CS with exce$$) really need knowledgeable professional expertise to do. NAELA is the platinum standard & they will have FA that understand nuances of medicaid compliance. Not a DIY project.

this may be a little off topic, but the people on this thread seem knowledgeable and a good group to ask. My mother is on a nh, on Medicaid. She has a modest life insurance policy. Can either Medicaid or the nursing home "take" it after her death? The nh called me shortly after she was admitted and asked who she had herlife insurance through. I won't call them to clarify because I don't trust them. Any help or answers will be appreciated.

The law having to do with Medicaid is that the home would have to be gifted 5 years in advance of the person applying for Medicaid. You've really got to be looking at all the Medicaid rules, such as the 5 year lookback, etc.

Bob: Foot in the door, yea, I understand that but what happens when Grams can't front the money for the incorrectly gifted house?