My parents gave me money that I know they will need for expenses themselves but if I spend the money on their care, will Medicaid still want them money back from me?

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Can I keep records that the money was spent on their living expenses and in-home nursing care so that Medicaid will not expect that money??

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Yes, you certainly can. Just make sure you get and keep receipts and pay everything by check. Keep the Receipt and the Check together. This will provide more than enough proof that their funds were used for them and not given away as a gift.
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