Does the Person Who Received a Gift from a Medicaid Applicant Have to Be the One to Return it to Erase the Medicaid Penalty?

  •  November 30th, 2021

Q. My mother gifted money to her granddaughter. Now my mother needs to apply for Medicaid and will be subject to a penalty period as a result of the gift. The granddaughter has spent the money, so she cannot return it. We are wondering who is allowed to cure a gift? Can only the recipient cure a gift from the applicant, or may other family members cure the gift by transferring money directly to the Medicaid applicant?

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Money returned to a Medicaid applicant is known as a “cure” and, in effect, erases the original transfer for Medicaid purposes. But the person who returns the money really needs to be the recipient of the gift; otherwise, it is not really a return of the original gift. If the person who received the transfer no longer has the funds to cure, other family members could give or loan that person the funds to do so.

For more on Medicaid’s asset transfer rules, click here.