San Antonio Express-News
Copyright 2009, Paul Premack
October 20, 2009

* Medicaid Barriers: Joint Accounts, House, Income *

Dear Mr. Premack: My sister is pursuing Medicaid to assist with her care in the nursing home. Her son is assisting. I have an investment account, containing only my money, but years ago I added my sister’s name with check writing privileges in case of emergency. What  is the possibility Medicaid will come after the investment account? – CL

A joint account can create real headaches when one accountholder applies for Medicaid. Under general Texas law, the funds in a joint account are owned by the party who owned them before they were put into that account. At the same time, each dollar in the account is not specifically earmarked as belonging to person A or to person B, so it is difficult to tell who owns what.

Consequently, the Medicaid regulations state that if an applicant has a joint bank account and can legally withdraw funds from it then all the funds in the account are presumed to belong to the applicant. Since the applicant will not be approved for benefits if assets exceed $2000 in value, it is vital to disprove that presumption.

Medicaid regulations state that if an applicant is found to be ineligible because of excess funds in a joint account, the applicant must be allowed to disprove ownership of the funds inside the joint account. The Medicaid caseworker will have to evaluate the source of the funds and the use of any withdrawals. If there is documentation to show that the non-applicant (you) put the funds into the account and that any withdrawals were used for the non-applicant (you) then they won’t be counted against the applicant (your sister).

As you might guess, that is a lot of detailed information you must disclose to the government just to protect your own funds.

Instead of waiting for a determination of ineligibility, you are far better off to change the account back to a sole ownership account before your sister applies for Medicaid. She should disclose that information to Medicaid when she applies, with details to show that the money was yours all along. The regulations contain a specific exemption from any penalty if accounts are changed to reflect their true ownership.

Since you added your sister to the account in case of emergency, you likely still want someone to be authorized to access your account in that event. The best approach is for you to sign a Durable Power of Attorney appointing an Agent. That Agent acts as your fiduciary, not as a joint accountholder. If that Agent later needs Medicaid (like your sister) the rules are clear that none of the funds in your account belong to the Agent.

Dear Mr. Premack: I have a mother with Alzheimer’s and in April of 2007 before she got too ill we transferred her house to me. If she goes into a nursing home will Medicaid come after the house for any money owed to them? She receives $1560/ month on my father railroad pension. I’ve heard from several friends that she cannot qualify for Medicaid because her income is too high. Is that true? – JA

You want to qualify your mother for Medicaid, and to do so she must not exceed their income and asset limitations. The exact income limit in 2009 is $2,022 per month, so your friends were wrong that the railroad pension of $1,560 is too high. The real problem you face is that the house was transferred to you in 2007. Medicaid imposes a transfer penalty when any asset is given away without equal compensation in return.

If, for instance, the house is worth $100,000 then Medicaid will disqualify your mother from receiving assistance for about 2 years. One exception: if you lived in the house with your mother for at least 2 years before it was transferred, and have evidence that the care you provided her helped keep her out of the nursing home, then there is no penalty because she gave you the house.

If that exception does not apply, then you can eliminate the penalty by deeding the house back to her. But if you do, then the Medicaid Estate Recovery Program may try to take the house after she dies. They will not make a claim if there is a surviving child who is blind or disabled, or who is unmarried and has lived in the home for at least a year. It would be a good idea for you to consult with an Elder Law attorney about your specific situation.