How Joint Bank Accounts and Property Affect Medicaid Eligibility

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When considering trying to qualify for Medicaid, many questions about jointly-held assets arise:

Should I re-title my house from joint names with my spouse into my name alone?

If I add my son's name to my bank account, will that affect my ability to qualify for Medicaid?

What do POD, TOD and JTWROS mean?

For the purposes of Medicaid, there are two different instances when the exact way an asset is titled can affect a family's finances: when a family member applies for Medicaid, and following the death of a family member who was covered by Medicaid.

Qualifying for Medicaid and Jointly Held Assests

When a person applies for Medicaid

When a single (unmarried) person applies for Medicaid the state will add up the value of all assets that are in that individual's name. This includes 100 percent of the value of all joint bank accounts in which the Medicaid applicant has an interest, except to the extent that the other joint owner(s) can prove they contributed to the account.

If all of the money in an account came from the parent, merely adding a child's name to that account will have no effect for Medicaid purposes because it is not a gift to the child. In this instance, the entire value of the account will still be counted for the purposes of determining the parent's Medicaid eligibility.

Note that if a joint bank account is titled in the name of the parent or child ("A or B"), then the above rule applies. However, if the title on the account reads parent and child ("A and B")—so that the signatures of both parent and child are required to write a check or withdraw money from the account—then adding that child's name to the account will mean that the entire balance of the account will be deemed a gift from parent to child.

If the parent adds POD (pay on death) or TOD (transfer on death) to an account, however, then it does not affect how Medicaid views the account, for purposes of eligibility. That is because POD and TOD only indicate who receives ownership of the account after the current owner's death. The parent/owner continues to have complete control over those accounts during their life and can withdraw the entire account at any time.

Joint ownership asset and real estate rules

With real estate, the rule is a bit different: when a parent adds a child's name to a deed, it is treated as if the parent is making a gift of 50 percent of the value of the house to that child. Adding the names of two children would be deemed a gift of two-thirds of the value of the house, etc. Under Medicaid rules, such a gift can cause a very long period of disqualification from receiving Medicaid, if the parent applies for Medicaid within five years of signing the new deed.

Real estate can be titled in three different types of joint ownership:

  • Joint owners with right of survivorship (JTWROS): means that upon the death of one joint owner, their interest passes equally to any remaining joint owners.
  • Tenants in common: means that upon the death of one joint owner, their interest passes as provided in their will and not automatically to the surviving joint owners.
  • Tenancy by the entireties: is a form of joint ownership that exists only between spouses which is similar to JTWROS, but includes additional asset protection features.

Special guidelines for spouses

With married couples, it makes no difference how an asset is titled as between them at the time of application for Medicaid. When one spouse applies for Medicaid, the state—in order to determine eligibility—will tally up all assets of both spouses, regardless of whether they are titled in the husband's sole name, in the wife's sole name or in joint names.

However, it is generally a good idea to transfer all assets into the name of the healthy at-home spouse, so that any Medicaid planning can be facilitated if the nursing home spouse become legally incapacitated.

After the Medicaid recipient dies, how an asset is titled is also important. The state must seek reimbursement of the entire amount of Medicaid benefits that it paid out on behalf of the recipient during the recipient's lifetime (often called "recoupment" or "estate recovery").

Many states limit this to "probate" assets, which only include assets in the sole name of an individual. Thus, accounts titled in joint names, POD, or TOD, would not be subject to such claims. Other states, however, still count an interest in such non-probate assets. Thus, it is important to learn your state's rules before setting up any joint accounts.

As you can see, the way an asset is titled can have a profound impact on Medicaid eligibility and the state's ability to seek reimbursement out of the assets of a Medicaid recipient following their death. Be sure you understand these differences if seeking Medicaid becomes an option for you or a member of your family.

K. Gabriel Heiser is an attorney with over 25 years of experience in elder law and estate planning. He is the author of "How to Protect Your Family's Assets from Devastating Nursing Home Costs: Medicaid Secrets," an annually updated practical guide for the layperson.

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6 Comments

I have received an inheritance (cash) from my father a couple of years ago. If my mother goes into a nursing home, will this cash be subject to look back rule?
The reason I was reading is because I'm caring for a terminally ill sister who said she'd deed me her house a year ago before we knew she was ill. Now I'm finding that the house isn't paid for. Can she still deed the house to me and I take over the payments?
I have a question. My elderly mom (who thought I was evicting her and I was not) closed a couple of our joint accounts. There is a brokerage account, which has been restricted.
I was informed by the brokerage company the account remains restricted until one of us passes or we each submit a notarized letter stating it should be divided
Can Medicaid or a POA access this restricted account?
Thanks, in advance