Joint Bank Accounts: They Could Mean Trouble if You Need Medicaid

KEY TAKEAWAYS

Adding a child to your bank account may seem like a simple convenience, but it’s one of the most common Medicaid planning mistakes you can make. Many Brooklyn families believe, “It’s still my money, so it won’t matter,” but Medicaid may see it differently. Adding a name to your account may jeopardize your Medicaid eligibility. However, our Brooklyn elder law attorneys can help you address this issue before it becomes a problem. 

It’s always a positive step to plan ahead for Medicaid. As people age, it’s possible that they’ll need nursing home care or an assisted living facility, and without the proper planning, they may be left with few options to pay for the astronomical costs of long-term care without depleting their hard-earned savings. Because Medicaid has such strict financial requirements for eligibility, many people wonder what they can do to shield assets and preserve their wealth while still getting their loved one the care they need.

The knowledgeable elder law and Medicaid planning attorneys at Landskind & Ricaforte Law Group, P.C. know that obtaining Medicaid benefits, especially if you’re facing a crisis and need financial support in a hurry, comes with challenges. They also understand the complexities of the Medicaid system and know that you want to do whatever you can to secure and safeguard your net worth. And this may cause you to make decisions too quickly and without guidance. Here, we discuss how Medicaid views joint bank accounts and Medicaid’s presumption of ownership.

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Joint Bank Accounts and Medicaid

When a loved one’s health is declining or failing, you may take care of them in a variety of ways, including assuming some of the management necessary to handle their financial affairs. In doing this, you may decide to place your name on your loved one’s bank accounts. You might do this:

1. 1. • To help make managing their finances easier
      • By depositing your own money into the account in case your loved one needs help paying bills and expenses

However, this can be a serious mistake if you’re planning to apply for Medicaid. In fact, it’s one of the common mistakes that could prevent you from getting Medicaid benefits when you need them. The way a bank account is titled and managed can have a significant impact on Medicaid eligibility and whether an applicant passes the asset test and complies with the Medicaid look-back rules. Be careful about adding your name to a loved one’s bank account. New York Medicaid has strict rules about how it treats joint bank accounts. Here’s what you need to know.

Joint Accounts: When One Owner Applies for Medicaid

When a Medicaid applicant is listed as an owner on a New York joint bank account, Medicaid presumes that the applicant owns 100% of the funds in that account. This is true even if the other account holder says they deposited most or all of the money themselves.

Even though a joint account may have two names on it, New York Medicaid assumes the applicant owns the entire amount in the account, regardless of who contributed money to the account. If your name is on a joint account and you need a nursing home, the state presumes the assets in the account belong to you unless you can prove that you did not contribute to it.

Why Adding Your Daughter or Son to Your Bank Account Can Be a Big Medicaid Mistake

Many people assume that adding a child as a joint owner does not change anything because the money still belongs to the parent. However, Medicaid reviews financial accounts carefully during the application process and may see it differently.

Adding a child to a bank account can create Medicaid problems because Medicaid does not simply look at whose name is on the account—it looks at ownership, access, and financial transactions. What you may view as a convenience can appear to Medicaid as an asset transfer, a gift, or shared ownership of funds. Those issues can affect eligibility, delay approval, or trigger penalties.

Medicaid May Presume the Entire Account Is Available to You

For Medicaid eligibility purposes, bank accounts are generally considered countable assets. When a parent applies for Medicaid, the agency wants to determine exactly how much money belongs to that applicant.

If a bank account is jointly titled between a parent and child, Medicaid may initially presume that the funds are available to the applicant unless evidence shows otherwise. This creates a documentation burden. Without clear records, Medicaid may question ownership and require extensive explanations to prove:

• Who deposited the money
• Whether the child contributed funds
• Whether the child withdrew funds for personal use
• The purpose of the joint account

Every Withdrawal Can Be Scrutinized

One of the biggest problems with a joint account is whether the child actually uses the account. For example, let’s say a Brooklyn father adds his son to a checking account containing $100,000. A few years later, the son withdraws $20,000 to help pay for a down payment on a home. From the family's perspective, the son was a joint owner and had every right to access the funds. From Medicaid's perspective, however, that transaction may look like a gift or and uncompensated transfer of assets.

The Child Legally Gains Ownership Rights

Many parents believe they are merely granting account access. In reality, adding a child as a joint owner often gives that child legal ownership rights. This distinction matters because Medicaid may view the account differently than the family intended.

A parent may think, “My child is only on the account to help me—to help me pay bills." However, legally, the child may have immediate access to every dollar in the account. That legal ownership can complicate Medicaid's analysis of who truly owns the funds and whether transfers occurred.

Other Problems When You Commingle Funds

When you commingle funds, Medicaid may not be able to tell whose money is in there when parents and children both deposit money into the account. For example:

• The parent deposits Social Security income.
• The child deposits funds to help with bills.
• The child occasionally reimburses themselves for expenses.
• Family members transfer money back and forth.

After several years, it would be difficult for Medicaid to ascertain who, exactly, owns what portion of the account.

When Medicaid requests five years of financial records for its look-back period, untangling those transactions can be challenging. The more commingled the account becomes, the harder it is to demonstrate ownership and explain withdrawals.

Because Medicaid wants to determine the source of deposited and withdrawn funds, they may review the withdrawals and spending patterns during the application process. Transfers to family members may appear to be gifts and can trigger additional scrutiny. Years of statements may be requested to verify ownership and activity.

Even when a child never considered the money to be theirs, Medicaid may still require documentation proving that the funds belong to the parent.

Proving Who Owns the Funds in the Account

To protect yourself from Medicaid's ownership presumption, the joint account holders must provide clear and convincing evidence that the funds actually belong to someone other than the applicant. This often involves tracking down years of bank statements, deposit slips, and withdrawal records to show who put money in and who took it out.

If the joint account holders can't definitively prove that the Medicaid applicant doesn't own the funds, Medicaid will count the entire account balance as an available resource belonging to the applicant. This can push them over the asset limit and disqualify them from receiving benefits.

Think Twice About Spending Down a Joint Account

Some families, when they’re faced with Medicaid ineligibility because they have too much money, may be tempted to simply spend down the joint account until it meets the asset limit. However, understanding the ways to spend down without incurring a Medicaid penalty in New York is essential because doing it improperly can be very risky and may lead to negative consequences due to New York Medicaid’s look-back period.

New York Medicaid’s Look-Back Period for Disqualifying Transfers

In New York, Medicaid has a 60-month look-back period for asset transfers. This means any money moved out of a joint account (or any other account belonging to the Medicaid applicant) during the five years before applying for benefits will be evaluated.

If Medicaid determines that funds were transferred for less than fair market value—in other words, if the applicant didn't receive something of equal value in return—those transfers may be considered disqualifying gifts. This can trigger a penalty period during which the applicant is ineligible for Medicaid benefits, even if they've since spent down their remaining assets.

Penalty Period

The length of a Medicaid penalty period depends on the value of the disqualifying transfers made during the look-back period. In some cases, the penalty can last for many months or even years beyond when the money runs out.

During a penalty period, the Medicaid applicant is responsible for paying for their own care out-of-pocket. For families who have already drained their savings to reach the asset limit, this can be a difficult burden to bear.

Joint Accounts: Don’t Make Mistakes That Can Derail Your Medicaid Eligibility

Adding a loved one's name to your bank account may seem like a harmless way to plan for the future, but it can have devastating consequences when obtaining Medicaid benefits. In New York, joint accounts are presumed to belong entirely to the Medicaid applicant, and overcoming that presumption is not easy.

Before you mingle your money with a potential Medicaid recipient, talk to our elder law attorney about how to structure your accounts and any financial assistance in a way that protects everyone's interests. With proper planning, you can help your family weather the storm without sacrificing your own security in the process.

Early Medicaid Planning: Talk to Landskind & Ricaforte Law Group, P.C.

Joint bank accounts are just one piece of a complex process when it comes to qualifying for Medicaid in New York. The best way to protect your family's assets and help ensure timely eligibility is to work with our experienced attorneys who understand Medicaid’s complicated rules and requirements. Medicaid planning works best when you do it well before a crisis happens. Our elder law Medicaid planning attorneys can help you:

• Retitle assets to exclude them from Medicaid's calculations
• Create trusts to preserve funds for your family's use
• Spend money strategically to benefit your loved one without triggering penalties
• Document your financial transactions to avoid confusion down the road

The earlier you start, the more options you'll have to shield your hard-earned savings from the high cost of long-term care. Read our testimonials to learn how we’ve helped other clients with their Medicaid planning.