Will paying back a personal loan disqualify my mother from Medicaid?

Consult with an elder law attorney please. My understanding (and I have two lawyers and working with a GAL) is that loans between family members (or anyone else) is always problematic and can be thought of as a way to hide money. If the lender is NOT a financial institution you open your Mom up to problems. So #1 get a lawyer and #2 refer back to step #1.

Pre-paid burial plans are typically exempt though they may have to be irrevocable. Elder law or estate planner would be worth investing in - and you can use some of Mom's money for that.

At this time my mom has accumulated $3000 above her expenses in hercking acct in which her social security ck is deposited. She also, receives a asmall chk from the VA all of which for the past year and a half pays for her stay in the nursing home. We accumulated the extra as a result of us overpaying before she qualified for medicaid. Will be penalized if I take the extra money and pre pay a portion on a pre-burial plan. My mom is 93 and has dementia.

ramiller you are right - I think I got thrown off the facts by reading some of the responses. Thank you for pointing that out!

Some of you are missing the point the daughter loaned money to mother. So as you stated iggy she is not trying to get out of paying her mother its her mother who owes her. Draw up an agreement regarding repayment of the loan, attach proof of bank transfer, copies of each check written as repayment and reserve the money in a seperate account until medicaid has done their review. That way if they want the money its there, but if you cover all your bases you should be ok. Just be upfront with them. They want documentation and the more the better. You can prepare the documents off legal zoom or another site. Seeing an attorney for just this issue will cost more than your loan. Hoping the best to you and mom.

Also, did you report the "gift" on your income tax return? That is another consideration that you have to look into. Loaned money is sometimes NEVER returned...the old adage, "you can't get blood out of a rock"...my husband loaned $500 to a needy friend, never to see it again. That's when I told him "we are not peoples' bank!

1RareFind returning borrowed money is a separate issue from running afoul of Medicaid rules. Of course borrowed money should be returned, and I would hope that LostinFlorida is not asking the question solely to get out of repaying the loan. But one must be very careful because failing to follow Medicaid rules, including the usual limit on having no more than $2,000 in cash, if it could cause someone to be disqualified and lose all of their medical coverage, so it is wise to proceed carefully, even if it means giving the person smaller payments to keep them from having too much cash and being thrown off Medicaid. Hope this helps!

I personally don't see why returning borrowed money would disqualify anyone from Medicaid. Anyone with morals will return borrowed money, this is the right thing to do, especially when you borrow from private individuals and especially more so when so many people are hurting financially these days.

Please keep in mind the look-back period. I borrowed $5000 from my mother when she began to decline, and a year and a half later I had to apply for Medicaid for her as we had 'spent down' most of her savings for her care. Luckily, I repaid that $5000 a few months later before applying. Medicaid did question that loan, and any check over a certain amount, for that matter.

Don't be alarmed. You have proof of the transfer, just not the intent to pay it back. Write up an informal agreement between the two of you spelling out the repayment schedule. Medicaid will accept that since you can show the bank transfer. You do not need an attorney to do this.

First, I feel your anxiety, for sure..Next, $5000 is a lot of money, but Medicaid nursing home payments would save a bundle, more than $5000 in just one month...You may find a way to get the money back without jeopardizing her application, but if not, try to think of the long range, big picure.

Grace +Peace,

Bob

If you have proof of the loan - a check or transfer from your account to hers, you can show that was a loan until the death benefits arrived. You can do an affidavit, and have any monies returned to you done so by check or money order with the notation that is repayment for the loan given on (whatever date you transferred the money to her). If you have an advocate in your state - elder affairs or other source - you can check with them about the rules and make sure you don't run afoul of them. In many states, an elder can't have more than $2000-$3000 or they are not eligible, so how did the state deal with the death benefit monies? Medicaid rules are byzantine, and different in every state, so you really need to consult with someone in your state who is expert in medicaid rules. Getting your answers here in this manner is about as good as using a fortune telling ball...get a qualified and knowledgeable person in your state to help you. I know that funeral pre-planning insurance documents are irrevocably assigned to the funeral home precisely to avoid having the money go into the estate or be counted against the surviving spouse which can make them ineligible for Medicaid if the insurance money was to go directly to them. That death benefit may have already made her ineligible. Good luck!

You need to consult with an elder law attorney.

Without official documentation of the loan, you may run into problems. The money you gave her is now considered a gift...as it was not a loan...so her giving you the money back would also be viewed as a gift. I would be very careful with this situation because it can be a real pain getting medicaid re-qualified.

Angel