Yes, you can return the money to your mother. This is known as a "cure" and, in effect, erases the original transfer for Medicaid purposes. And there's no problem with you making a gift to your mother. If each person is giving her $13,000 or less, it doesn't need to be reported. If anyone is giving more than $13,000, technically, it's supposed to be reported to the IRS, but with the newly passed tax bill, you'd have to give away $5 million before there'd be any tax.
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