One of my siblings borrowed some money from our mom over three years ago. Mom had to be placed in long term care nursing facility earlier this year. The sibling has made one payment and they are not sure how much or when they can pay another payment towards the loan. Will the balance they owe be an issue if our mom has to apply for Medicaid since the look back period is five years? What will happen in regards to the outstanding loan balance? Thanks in advance.

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Charities like JDRF or other legit charity /foundations?
I’d bet a case of Prosecco those can totally get waived from any penalty by Medicaid. But mom needs to stop sending $. & .this is important as it shows once mom / you / dpoa became “aware” that it might be an medicaid issue in the future, the $ flow was stopped.

If $ is on an auto draft, it’s going to be sticky to stop. How I’d approach this would be as to send a letter (I’d do uspo certified with return signature card) to the charity telling them it’s over and then do the request at moms bank to stop auto pay once you get the green return postcard back. Could take 2 payment cycles to quit.

Your not gonna be the first to have to do this to a charity.
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Thanks for your quick response. So you have to wait til you are past the lock back period and the gifting does not fall in lock back - or you have to pay the nursing home the money? But what if you don't have the elder in a nursing home - that is, you do not owe any nursing home any money. (Bills are all paid or were never incurred). I'm looking at a (potential) situation where the elder made regular charitable gifts (legall IRS recognized charities). So should the elder cease to make these gifts if it is uncertain that they will every need Medicaid for nursing home care? Talking about maybe 400 dollar/months. Igloo and KatieKate how would you suggest handling this?
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Rovana - “legal” if you mean does the transfer penalty go away, no it doesn’t. KatieKate has the situation described spot on in her answer imo.

Another sticky in this $wise, is even if family moves elder out of NH to at home care, the old NH bill still exists. I would think NH will turn bill to collections. There’s that period of time when the application is in review & they are considered Medicaid Pending that can run for weeks or months. Like for my mom it was about 5 1/2 mo (Jan - June) so for that period of time all the NH got paid was my moms copay or SOC (share of cost); now she was eventually Medicaid eligible & Medicaid paid retroactively back to Jan., so all ok. But if there had been a problem, the only $ the NH would get would be paid is the copay. All other $ owed would be a collections / bad debt situation.

As an aside on theory a NH is not to show a preference for residents who have a higher co pay. Yeah sure & I have a lovely stretch of land to sell to you on the Louisiana coastline! But they do. When I was NH shopping, every NH whither good, bad or indifferent asked what my moms income / awards letters was. She got about $ 1800 a mo, which was really high for a nonagenarian. You could tell whomever was doing the NH tour was positively giddy over a potential Medicaid Pending resident coming in at close to 2k in copay. A lot of elders have just a very modest $600 - $800 SS income.
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Taking the elder into your home will not satisfy the penality.

The penality is to PAY the nursing home CASH until the same amount of the gift has been spent on their care.

The only way to get out of the penality by keeping the elder at to wait till the 5 years expires.

My Aunt went thru this....currently in my cousins home... 2 more years to go till the 5 year look back no longer includes the year the gifts were made.
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Igloo, is it legal to take the elder out of the nursing home to provide care at home during the penalty period?
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For mom to be eligible for LTC Medicaid, she will need to provide up to 5 years of financials. The $ loan will surface.

To me the key issue will be DOES medicaid consider it “gifting” with a subsequent transfer penalty OR a loan that produces Income that is used in determining her copay or her SOC (share of cost) paid each mo to the NH.

It’s very different problem to work through. So did they do a real loan agreement, or Promissory Note with some sort of interest rate or collateral placed against a the loan? So in theory bro has a legit debt that has a payment history and possibly could be repaid?

Or was this the more usual, loose mom/son Agreement with a hope he would repay? If it’s this, it’s proably just simpler to consider it a gift and try to get him to share the transfer penalty costs.

Penalty is basically a fraction / math problem:
Your state has a set amount that the NH is paid by Medicaid for the daily room & board rate. Varies by state. Most around $ 175 day. The R&B is the divisor, the denominator.

The $ mom gifted bro is the numerator. The top half of fraction.

Divide the figures and it’s basically the # of days mom - although she is now poor enough to qualify for Medicaid- she is ineligible for Medicaid to pay due to the penalty. Penalty is by days starting on day 1 of medicaid application.

Say dad gifted 200k home to daughter 1 yr ago. Dads state pays less than national average at $ 160 R&B. 200k divided by 160 is 1,250 day penalty period in which dad stay in NH will NOT be paid by Medicaid. Usual scenario is Family is expected to private pay under contract that they sign off on to be personally responsible for in order for dad to continue to reside at NH. Often family moves dad back home to live till the penalty period is past.

Penalty can be waived, like bro declares bankruptcy with debt included in his filing. Or family pressures bro to repay $ owed. Or family files a police report that bro stole $. Or you pay the penalty. None are pretty choices.

There been posters on this site, who actually had to transfer back the property to the parent to get beyond the penalty.

Personally unless it’s a really low figure penalty (someone recently posted that their mom gave 2 5k CDs to 2kids, which is like a mo or so of private pay and manageable to pay to get out of transfer penalty purgatory), I’d suggest you get an elder law atty who is experienced in doing Medicaid appeals to shepherd your moms application and deal with your brother.
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