Qualifying for Medicaid to pay for the cost of a nursing home or assisted living care is complicated. There are a lot of pitfalls and rules that don’t make sense. One of those difficult areas is joint assets. These are the types of assets that are owned by a person who is receiving care (i.e. the Medicaid applicant) and someone other than a spouse such as a child or other family member.
Joint assets are very common and understandably so. If a child or other family member is helping the Medicaid applicant make financial decisions, they’ll almost inevitably create a joint account in both of their names. This will allow that child or other family member to pay bills and handle transactions for the Medicaid applicant. Also, with the cost of housing, it’s becoming increasingly common for the child or family member to purchase a home jointly with the Medicaid applicant. In doing so, the house becomes a joint asset.
While they’re typical in these situations, joint assets significantly complicate Medicaid eligibility and the application process. These are the best practices to keep in mind with joint assets:
1. Minimize creating joint assets as much as possible. Joint assets make Medicaid much more difficult for a number of reasons. A single person can only have $9,660 in countable assets so every asset matters. If the Medicaid applicant is a joint owner, that asset will very likely be countable against eligibility (even if it has money from the child or other family member) and this could jeopardize eligibility of the Medicaid applicant. Another issue is joint accounts have to be disclosed as part of the Medicaid application process. If transactions on the most recent statement of a joint account raise questions, the case worker will require the disclosure of prior statements potentially going back 5 years. This is clearly a burden and it may not even be possible to obtain them if the joint account was with a bank that’s merged with another financial institution. Finally, transfers to the child or other family member on the joint account are assumed to be gifts and divestment under the Medicaid rules. This will penalize the Medicaid applicant, delay when Medicaid benefits are approved, and may mean that the child or other family member have to pay for the cost of care for a period of time. This will be a financial strain because nursing home care will typically cost $11,000 – $13,000 per month, and assisted living care will be $5,000 – $7,000 per month.
2. Be very careful managing joint assets. If a joint asset needs to be created, be very careful how it’s used. For example, if a bank account is set up, don’t co-mingle funds. Only have the Medicaid applicant’s income transferred into the account and transfers coming out of the account should only be for the Medicaid applicant. The child or other family member shouldn’t have any funds transferred out of this account unless it’s for reimbursement and there’s documentation to support it. If the Medicaid applicant has purchased a house with the child or other family member, the ownership on the deed should track exactly with what’s paid for the purchase. For instance, if the Medicaid applicant paid 70% of the downpayment or purchase price and the child paid for 30%, the deed should reflect the Medicaid applicant owning 70% and the child owning 30%. In other words, they shouldn’t be joint owners with rights of survivorship. Also, the payment of expenses should be consistent with the ownership percentages. In this example, the Medicaid applicant should pay 70% of the expenses and the child should pay 30%. If this isn’t done and the Medicaid applicant pays for more than his or her share, the difference will be considered divestment and delay when Medicaid will pay for benefits.
3. Document all transactions for joint assets. If the Medicaid applicant has any joint assets, it’s critically important to keep documentation of all transactions for those assets. Buy a 3-ring binder and put each monthly statement into that binder. As I mentioned above, statements should be kept going back 5 years. Also, don’t withdrawal cash out of the joint account. May payments with a debit card. Don’t write out any checks to the child or family member unless there are records to substantiate it as a reimbursement. On a different note, if the Medicaid applicant and child or other family member purchase a house, keep records from the purchase including what’s contributed to pay for the purchase price or downpayment as well as the closing statement. Also, maintain records for the payment of any house expenses to be able to justify who had paid for them.
Joint assets are very common and understandably so. If a child or other family member is helping the Medicaid applicant make financial decisions, they’ll almost inevitably create a joint account in both of their names. This will allow that child or other family member to pay bills and handle transactions for the Medicaid applicant. Also, with the cost of housing, it’s becoming increasingly common for the child or family member to purchase a home jointly with the Medicaid applicant. In doing so, the house becomes a joint asset.
While they’re typical in these situations, joint assets significantly complicate Medicaid eligibility and the application process. These are the best practices to keep in mind with joint assets:
1. Minimize creating joint assets as much as possible. Joint assets make Medicaid much more difficult for a number of reasons. A single person can only have $9,660 in countable assets so every asset matters. If the Medicaid applicant is a joint owner, that asset will very likely be countable against eligibility (even if it has money from the child or other family member) and this could jeopardize eligibility of the Medicaid applicant. Another issue is joint accounts have to be disclosed as part of the Medicaid application process. If transactions on the most recent statement of a joint account raise questions, the case worker will require the disclosure of prior statements potentially going back 5 years. This is clearly a burden and it may not even be possible to obtain them if the joint account was with a bank that’s merged with another financial institution. Finally, transfers to the child or other family member on the joint account are assumed to be gifts and divestment under the Medicaid rules. This will penalize the Medicaid applicant, delay when Medicaid benefits are approved, and may mean that the child or other family member have to pay for the cost of care for a period of time. This will be a financial strain because nursing home care will typically cost $11,000 – $13,000 per month, and assisted living care will be $5,000 – $7,000 per month.
2. Be very careful managing joint assets. If a joint asset needs to be created, be very careful how it’s used. For example, if a bank account is set up, don’t co-mingle funds. Only have the Medicaid applicant’s income transferred into the account and transfers coming out of the account should only be for the Medicaid applicant. The child or other family member shouldn’t have any funds transferred out of this account unless it’s for reimbursement and there’s documentation to support it. If the Medicaid applicant has purchased a house with the child or other family member, the ownership on the deed should track exactly with what’s paid for the purchase. For instance, if the Medicaid applicant paid 70% of the downpayment or purchase price and the child paid for 30%, the deed should reflect the Medicaid applicant owning 70% and the child owning 30%. In other words, they shouldn’t be joint owners with rights of survivorship. Also, the payment of expenses should be consistent with the ownership percentages. In this example, the Medicaid applicant should pay 70% of the expenses and the child should pay 30%. If this isn’t done and the Medicaid applicant pays for more than his or her share, the difference will be considered divestment and delay when Medicaid will pay for benefits.
3. Document all transactions for joint assets. If the Medicaid applicant has any joint assets, it’s critically important to keep documentation of all transactions for those assets. Buy a 3-ring binder and put each monthly statement into that binder. As I mentioned above, statements should be kept going back 5 years. Also, don’t withdrawal cash out of the joint account. May payments with a debit card. Don’t write out any checks to the child or family member unless there are records to substantiate it as a reimbursement. On a different note, if the Medicaid applicant and child or other family member purchase a house, keep records from the purchase including what’s contributed to pay for the purchase price or downpayment as well as the closing statement. Also, maintain records for the payment of any house expenses to be able to justify who had paid for them.
