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.