By Indy Senior Advisor Care Team · October 2, 2026
Indiana looks back 60 months at gifts when a parent applies for nursing home Medicaid. Here is how the penalty math works with this year's $8,027 figure, when it starts, and what to ask before anyone transfers money or a house.
The gift that shows up on the application
Here is how it usually goes. Mom needs a nursing home. Money is thin. Someone in the family says, didn't she give your brother twenty thousand dollars for the truck? Nobody thought anything of it at the time. Now there is a Medicaid application, and the state wants to see everything.
Indiana does not forbid giving money away. It does something quieter. When a person applies for Medicaid to pay for long-term care, the state looks back at what that person gave away or sold for less than it was worth. If it finds transfers, it can refuse to pay for nursing home care for a stretch of time. That stretch is called a transfer penalty.
This guide explains the look-back, the penalty math, the real Indiana numbers as of this month, and the questions to ask before anyone writes a check or signs a deed. It is general information. It is not legal advice, and a transfer that looks harmless can cost a family months of coverage.
What the look-back actually covers
The review period is 60 months, counted back from the date of the Medicaid application for long-term care. That is five years. FSSA's own guidance describes it as a 60-month review of transfers, after a phase-in that began in 2009 and finished in 2012.
The key word is uncompensated. Selling a car to a neighbor for what it is worth is not a problem. Giving the car to a grandson is. So is selling a house to a daughter for one dollar, adding a child to a bank account and letting that child withdraw the money, or paying a relative with no written agreement for care.
Ordinary life does not trigger a penalty by itself. Paying your own bills, buying groceries, fixing the roof and paying for a funeral plan are spending, not giving. The trouble starts when money leaves the parent's hands and no matching value comes back. Bank statements for the full five years are what the caseworker will ask for, so it helps to start collecting them early.
How the penalty is figured, with this year's number
The penalty is a division problem. Indiana takes the uncompensated amount and divides it by a fixed monthly figure that stands for the average private-pay cost of a nursing facility. In Indiana's Health Coverage Program Policy Manual, section 3006.00.00, that figure is $8,027 a month for applications filed on or after July 1, 2026.
Run the truck example. A $20,000 gift divided by $8,027 is about 2.49 months. Round that up and the family is looking at roughly two and a half months in which Medicaid will not pay for the nursing home, even though the parent is otherwise broke and qualified. A $40,000 gift is close to five months. A $100,000 gift is more than twelve.
Two cautions. First, $8,027 is a statewide policy figure used for the math. It is not the price of any Indianapolis facility, and no published number exists for what a Marion County nursing home charges per month. Second, FSSA guidance has said the rate in effect on the date of the application is the one used, not the rate on the day of the gift. The manual's section 2640.10.35.05 holds the exact rounding rules for partial months, so ask the caseworker or an attorney to show the calculation.
When the clock starts, and why that hurts
Most families assume the penalty begins on the day of the gift. It does not. Under FSSA guidance, the penalty starts on the later of two dates: the first day of the month of the transfer, or the date the person would otherwise qualify for long-term care Medicaid but for the penalty.
That second date is the painful one. A person is not "otherwise eligible" until she is in the facility, has applied, and has spent down to Indiana's $2,000 resource limit for a single applicant (section 3005.10.00). Her monthly income also has to fit the program rules; the Special Income Level is $2,982 a month as of January 1, 2026 (section 3010.20.15).
So the family cannot give money away, wait out the penalty at home and then apply. The penalty only starts running once she is already out of money and needs the bed. For those months someone has to pay the nursing home, and the money that would have paid is the money that was given away. This is the part that surprises people most.
Exceptions that are real, and ones that are not
Indiana does carve out some transfers. FSSA guidance lists a home that lawfully houses a spouse, a child under 21, or a child who meets Social Security disability standards. The policy manual treats transfers of homes and income-producing property in section 2640.10.15.05, and payments under a written care or services agreement in section 2640.10.20.20.
Those sections have conditions, and the details matter. A written agreement that pays a family caregiver at a fair rate for care actually provided is very different from reimbursing a child after the fact for "all the help." If a family is thinking about paying a relative, read our guide to structured family caregiving first, and put the terms in writing before the first payment.
One more thing that does not work: adding a child to the deed or the bank account "just in case." A jointly held asset can still be counted, and a later withdrawal by the child can be treated as a transfer. Retitling is not a loophole, and it can cause problems when a parent later needs the asset.
The house, and the $752,000 line
Indiana separately limits how much home equity a long-term care applicant can have. For 2026 the policy manual sets that limit at $752,000 (section 3005.10.05), effective January 1, 2026. Most Indianapolis homes owned by a retired parent sit well below that, which is why the house usually becomes a question about transfer, not about equity.
A parent who deeds the house to a child to protect it from the state is making exactly the kind of uncompensated transfer the look-back is built to catch. The home's value, not a symbolic dollar, goes into the penalty math. Families who are worried about the house after the parent's death should also read our guide to Medicaid estate recovery, because recovery is a separate program with separate rules.
If the parent will be moving to a Residential Care Facility instead of a nursing home, remember that Medicaid pays care services and room-and-board help through different programs. Our PathWays and RCAP explainer walks through that split.
What to do before anything moves
Start with a plain inventory. List every gift, sale, large withdrawal and retitled account from the last five years, with dates and amounts. If an old gift is already in the file, you can plan around it. If it is a surprise, you want to know before the caseworker does.
Next, talk to someone who is paid to know Indiana's rules. An elder law attorney can tell you whether a transfer can be returned, whether a hardship exception is realistic (section 2640.10.40 covers the transfer penalty hardship exception), and whether an Indiana Partnership long-term care policy changes the picture. Our Partnership policy guide covers that one.
For free guidance on programs and next steps, CICOA Aging & In-Home Solutions serves Marion, Hamilton, Hendricks, Johnson, Boone and Hancock counties from 8440 Woodfield Crossing Blvd. in Indianapolis. Its Resource Center line is 317-803-6131. CICOA can explain programs, but it is not a law firm and cannot tell you how to restructure assets.
Finally, do not guess about the numbers. The figures above come from FSSA's manual as read in October 2026, and they change. Confirm the current ones in the manual or with a caseworker. We could not find any published count of how many Indianapolis families receive a transfer penalty each year, so we will not offer one. For the wider picture, see paying when money runs out.
