Joint Accounts and Medicaid?

by Sanford Altman, Esq.
Jacobowitz & Gubits, LLP

Question:
I have a joint account with my son. Is it protected if I need nursing home care?

Answer:
Many seniors add the name of an adult child to their various accounts for convenience purposes, so that the child can sign for the parent should the parent become disabled. The child either may be added as a joint owner or simply be given the power of attorney to sign for checks or otherwise withdraw funds. The difference between these two is that, since powers of attorney's die with you, the child will have no access to the account after the parent dies. On the other hand, after death, the joint owner can generally treat the account as if it were his or her own. It is important to confirm whether your child is a joint owner or merely has a power of attorney. It is only joint ownership which may, in some cases, provide protection.

When is protection provided?
It depends upon where the account is and what it takes to access the funds. If the account is in a "financial institution" which encompasses all the different types of banks, credit unions, etc., any joint account is considered by Medicaid to belong 100% to the applicant. This means that it is all available for payment to the nursing home. They assume, usually correctly, that the money belonged to the parent and the child was placed on the account for the parent's convenience.

This is, however, what is referred to as a "rebuttal presumption" under the law. In other words, if you can prove that some or all of the money placed in the account belonged to the child, that amount may be deemed to be protected - unavailable for the nursing home.

Coincidentally, I recently submitted a Medicaid application for a client whose child had actually saved copies of checks that he had deposited in the joint account. So far, the preliminary indication is that his contribution and the interests that it earned will be considered an available asset. If this changes, I will let you know in future columns.

While joint bank accounts are considered to belong to the applicant 100%, brokerage accounts - stocks, bonds, mutual funds etc., are only deemed to be owned 50% by the applicant. If your $100,000.00 account is jointly owned with your child, Medicaid will only consider $50,000.00 to be an available asset. If Medicaid has reason to believe that all the money came from the applicant, it is your burden to prove it, which would be extremely difficult for them.

However, as with the bank accounts, if you can prove that the child contributed than 50%, those funds will also be unavailable.

Finally, if any joint account requires two signatures to withdraw funds and the child refuses to sign, from a practicable standpoint, the entire amount may be considered unavailable. However, whether or not Medicaid can go to court and force the child to consent may still be an open question.

For planning purposes, the best strategy with joint accounts is to make sure that any contribution by the child is documented and saved for future use and, if otherwise practical, consider utilizing brokerage accounts rather than bank accounts. The protection offered may well be worth it.