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How Does Medicaid Treat Joint Bank Accounts?

A common question family members and loved ones often ask us is: What about joint bank accounts? How does Medicaid handle these assets? How does this affect Medicaid eligibility?

Joint bank accounts are very common in the context of senior assets. Senior individuals will often place a joint owner on a checking account or other financial account or even brokerage account, often putting a child’s name or other family member on the account. This is done for convenience purposes, particularly when the adult child or other loved one is actively involved in the management of the senior’s finances, particularly once they have entered a nursing home or perhaps assisted living. Joint ownership avoids the need to submit a power of attorney to a bank or other financial institution. This is expected by Medicaid and is completely fine, even encouraged. This status will not affect the receipt of Medicaid benefits.

Unlike Medicare, Medicaid is means tested, so ownership of assets, and asset limits, are relevant to Medicaid eligibility. Typically, Medicaid will always treat any account that is even partially owned by the prospective Medicaid applicant to be fully available to the Medicaid applicant if the Medicaid applicant’s Social Security number is the identification number associated with the account. However, if the source of funds in the account is not the Medicaid applicant, the applicant can submit evidence that some of the account or the entire account was deposited by the adult child/joint account holder, and these funds will be eliminated as countable assets. The evidence of alternate source, however, must be convincing.

It is important to note that, even though another individual may be a joint owner on any type of joint account, that does not mean that the child/joint owner is free to use a portion for the entire amount for their own use. The assets in the joint account are fully considered countable assets designated to the long-term care recipient and must be part of the spend down of the individual receiving the nursing home care. Any withdrawal by the other co-owner is considered a gift of the applicant’s assets and, if made within the five year look back period, will create a penalty period of ineligibility. As you can see, proper Medicaid planning should always accompany any of these financial moves.

For married couples, most of these rules are irrelevant. It is quite common for spouses to be joint owners on bank accounts, or for one to act as POA for the other under a Financial Power of Attorney or under a Directive. However, all assets held by either spouse are considered available to the Medicaid applicant spouse, and are subject to spend down. So while joint accounts are fully allowed for married couples, and they do not hurt Medicaid eligibility, they do not help either.

These considerations must be taken into account when Medicaid long-term care is potentially on the horizon. Estate planning may need to be adjusted. If legal advice is necessary, QMC can guide you to an experienced elder law attorney.

No matter the situation, QMC can guide you through all of these steps towards Medicaid eligibility on the earliest possible date.

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