By skyforbes Hello! I am wondering about any ramifications if I were to pay off a private loan for my parents who will likely be eligible for Medicaid in the near future. Info below:
Background: my father is 66 and suffered a massive stroke 2 years. He is completely bedbound and currently receiving social security, and my mother is is full-time caretaker. He is on Medicare, my mother is not (she is 63). Their only current income is social security. My father was a contractor with an LLC, and after the stroke his company was sold for approx 120k. There is 60k left of that one-time payout at the moment and they have very little other money. They live in VA, are still paying the mortgage on their home bought in the 80s. The money they do have is running out quickly.
Question: Last year, they had to do a major home repair and my mother took out a private loan with an interest rate of 7% to pay for it. There is approx. 24k left on the loan, and I would like to pay it off for them. I would prefer transferring the money to my mother and having her pay it off from her own account, but want to know if it would negatively affect my parents' eligibility for Medicaid in the future. Would a one-time deposit of this amount hurt them if it was immediately used to pay off a loan? I am married so together my spouse and I could gift them the money and be under the couples limit for the gift tax in 2025 (38k).
Thank you for any advice! I am lucky to be in a position to help them, and want to do it in a way that will cause the fewest issues down the road. In particular, Medicaid would potentially pay for a long-term care facility for my father that would be a godsend for our family, so I do not want to jeopardize that possibility in the future.