You are referring to the five year lookback for Medicaid--not Medicare. If you go on Medicaid to pay for nursing home costs, for example--- there is a five year lookback for any money or assets you have given away. Consult an elder law attorney for more details and information. In many localities, you can get at least one free consult with an elder law attorney to help with such plans. The laws vary in the fifty states, so it is important to know the laws in your own state.
And....your question here is not really an income tax question -- but there is another question about your idea that has tax implications. You and your spouse can give away up to $17,000 per spouse to your daughter and son-in-law without having to file a gift tax form, but if you give more than that in a year, you need to file a Form 709 gift form. The money you give to them is not taxable to them, but you may need to file tax form yourselves.
Money that you receive as a gift is not taxable income to you, and you do not need to report it on your income tax return. Money that you gave as a gift to someone else is not deductible for your taxes.
Turbo Tax does not support the gift tax form 709, but here is a link:
https://www.irs.gov/pub/irs-pdf/f709.pdf
https://turbotax.intuit.com/tax-tips/estates/the-gift-tax-made-simple/L5tGWVC8N
**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
