The annual exclusion $18k per spouse, so a married couple can give $36k to an individual per year tax free. That's $72k from one couple to another married couple.
No taxes. No reporting. Some specific rules apply to minor grandchildren and pass through. Always best to consult with a tax attorney on those details.
But these payments will show up on banking statements. That matters later on in this scenerio.

The lifetime estate and gift tax exemption is now $13.61 million per individual for 2024 gifts and deaths. This increase means that a married couple can shield a total of $27.22 million without having to pay any federal estate or gift tax. This is separate from the annual exclusion. Must be reported and tracked along with annual IRS tax reporting. Shows up on banking statements as well.

Medicaid only "claws back" when they find violations of their requirements after benefits have been paid out. Usually in an audit performed after a Medicaid recipient passes. You agree to those requirements at the time of application, under potential penalty of law.

The thorough review of the Medicaid application before benefits are granted (while in Medicaid pending status) usually prevents a claw back from occurring.

The 5 year look back is detailed and precise. ALL payments, deposits or withdrawals of $ 5K and up are to be declared and revealed. Receipts are requested. Detailed banking statements must be provided for 60 months prior to the date of application. All income statements, assets, sales of assets, pensions, investments, stock accounts etc...
There is a maximum cash on hand to even apply. My state is $1600. Can not be exceeded in any month benefits are paid out.
The account is subject to continual review to prove benefits eligibility.

If there exists anything found during the application for eligibility investigation, it will result in a penalty by a delay in granting benefits, a specific dollar amount allowed per month for a certain number of months until it equals the penalty.

IRS allowances are not Medicaid allowances.

Want to see a "spend down" on steroids? Go into long term care.