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and must be part of a spend down. The deed and title are in our name only. It wasn't a gift as they call it, it was payment for us taking care of them for 7 years. Can they do this ?

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Yes. They can do exactly this.
It was not arranged legally as payment, and I assume wasn't claimed as "pay" on your IRS. So it is not payment. So they can say it was gifting.What actually it was was asset protection, as that was your parents assets and should have been spent legally on their care. As it was not, now you are all in trouble. To return this "gift" you would have to sell the home, returning the amount your parents gave you to them.
We hear of these things happening very often. I am sorry you were unaware of how this would booby trap the future for your parents.
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See an Eldercare attorney.
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I believe it hinges on specifically when the house was put in your name as compared to when Medicaid was applied for. State laws seem to vary as well. Other people here on the forum will know more of what the issues are with this.
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Yes Medicaid can do this. Medicaid is correct, it in their eyes it is a gift. You can’t just transfer assets during the 5 year lookback and claim it was payment for caregiving. It has to be done at a specific time and with specific things in place (such as a legal contract) otherwise as you now know, it will affect Medicaid eligibility. You will need a lawyer to help you fight this with Medicaid.
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my parents stayed in that home two doors down from ours so that we could care for them 24/7 both in their nineties mom alzheimer and dad chf with diabetes. We did everything for them for 7 years. Dad and mom both went to nursing home a few weeks ago because we can no longer lift dad and medicare medicaid being sorted out at this time. SO that money did go to their care. Without us they would have gone into nursing home 7 years ago.
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