The $ spent on the vacation for family will be viewed as gifting and subject to a transfer penalty under Medicaid. The transfer penalty is set by each state as it is dependent on each state daily reimbursement rate paid by Medicaid. Under Medicaid rules, the applicants funds must be used for themselves for their care and also can be used for their property. So maw-maw's getting a new roof on her home 2 years ago is OK for Medicaid, but taking you and your family of 6 on a cruise is not OK by Medicaid. Maw-maw could spend it on getting a face-lift if she wanted too but can't pay for grandkids tuition.
But you may have more issues that just the "vacation" $. The Medicaid application will likely be red-flagged for a more detailed review on all the financials. So be prepared to be able to provide for in detail their banking records; if safe deposit boxes were closed out (and provide a contents report); their credit card statements, etc. The thought is that if maw-maw pays for vacations, then maw-maw has probably been underwriting lots of other expenses for the family so a detailed secondary review of their application is done.
But you may have more issues that just the "vacation" $. The Medicaid application will likely be red-flagged for a more detailed review on all the financials. So be prepared to be able to provide for in detail their banking records; if safe deposit boxes were closed out (and provide a contents report); their credit card statements, etc. The thought is that if maw-maw pays for vacations, then maw-maw has probably been underwriting lots of other expenses for the family so a detailed secondary review of their application is done.