Children and parents should be aware of adding one another to their bank accounts as joint owners. While joint bank accounts may offer parents a certain level of protection by making sure that someone will always have access to their money to pay bills, joint bank accounts are more likely to cause greater issues instead of resolving issues. As individuals begin to grow older, they tend to become concerned with how they will finance their long-term care. Many people turn to Medicaid, a joint Federal and State funded program, to help fund this expense. Since Medicaid eligibility is determined by a combined value of assets and income, joint bank accounts can have negative effects on a person’s ability to secure Medicaid benefits.
The most common misconception with joint bank accounts is that if two names are on the account, one person owns one half while the other person owns the other half. This is false, especially for those applying for Medicaid funding. Medicaid will view the joint bank account as being owned 100% by the applicant applying for Medicaid. For example, Linda adds her son Andrew to her joint bank account. Linda then decides that she needs to apply for Medicaid to finance her long-term care. Unfortunately, Linda has $200,000 in the bank account with Andrew and Medicaid will view the full $200,000 as belonging to Linda. Medicaid will not assume that Linda owns $100,000 while Andrew owns $100,000.
The reason for Medicaid viewing a joint bank account as belonging 100% to the applicant is because both joint owners retain full ownership of the monies in the account. A joint owner will have complete authority to deposit and withdraw as much money as is in the account. Therefore, even if Andrew was the one who put in the full $200,000, Linda still retains the right to withdraw all $200,000, thereby making it possible for Linda to have access to that amount of money in order to fund her own long-term care.
This rule will not affect those bank accounts that have named the applicant as a pay on death (POD) or transfer on death (TOD) beneficiary. POD and TOD provisions indicate who will receive ownership of the account after the current owner has died. Therefore, if Andrew named Linda as a POD beneficiary to his bank account, Andrew still retains complete control over the assets in the account during his lifetime. Linda will have no authority to deposit or withdraw any amount in the bank account until after Andrew’s death.
The only way that the joint bank account ownership may be challenged, as to defeat Medicaid from using those assets to pay for long-term care before they will provide funding, is to provide evidence that the applicant was named on the account out of convenience. There is a heavy burden of proof in order to show that the applicant has no actual ownership of the account. It may be necessary to prove that the applicant has never deposited or withdrawn any money in the account. Additionally, it may also be necessary to show that the applicant’s name was merely added to the account so that person may pay the other account holder’s bills.
This rule is not applicable to joint stock or brokerage accounts. A jointly held stock or brokerage account will be presumed to be owned at a 50/50 rate.
Medicaid pays for the largest share of long-term care services, but only if the individual meets eligibility requirements. The Medicaid application and eligibility professionals at P&P Medicaid Consulting, Inc. assist Nassau County, Suffolk County, and Queens residents in preparing applications for Medicaid eligibility while taking advantage of programs and planning options that will protect their income and assets. For more information or to schedule a consultation, call our Long Island, New York Medicaid consulting office at (516) 541-4770 or fill out our contact form.