Her only income is $1500 a month in SS. I have been paying some of her bills for the past couple of years and she planned to pay me back once the house sold since most of it was put on a credit card, about $5000. We had hoped to set aside the rest (her house sold for $100,000) for her long term care and funeral expenses. She had been living in a retirement community but fell and broke her hip and is going to need long term nursing home care. They have recommended we apply for Medicaid. We close on the house August 10th. Will she be able to pay me back and can we set any of it aside? In the future I had hoped to have more options for her long term care - in other words not limited to just facilities that take Medicaid.
Is the sale of the house definite? I would immediately seek the advice of an Elder law attorney who handles Medicaid questions. I know that normally a house is exempt for Medicaid purposes, but once it's cash, that's different. I would see a attorney ASAP and see what her options are before I did another thing.
Mom has to spend 98k on herself or her needs before Medicaid will. Reimbursing you can pose transfer penalty issues if not dealt with properly - which the attorney can hopefully give you options. The Medicaid application can require mom to provide a full 5 years of bank statements; state will know what the house sold for too as county assessor dovetails real property info to the state database. The state tends to view any $ paid by kids for their parents as done out of love with no compensation unless there is an agreement for this.
Get the legal appt set up before $ gets moved about. Good luck.