Last week we were examining Mary Jane’s problem getting Medicaid for her mom. Specifically, the issue was a joint account held by mother and daughter.
Into that account, Mary Jane deposited her income which she used to pay for household bills, such as utilities, real estate taxes, homeowner’s insurance etc. She took some of Mom’s income and transferred it to that joint account in order to pay some of those bills. She explained that both of them were living in the household so they both contributed to the costs.
“Not a problem”, I told Mary Jane. “But, if you are claiming that the account isn’t Mom’s, you have the burden of proving that. Medicaid assumes that it was Mom’s account and she put your name on it, not the other way around. You must trace that account back to when it was just in your name, before you added Mom as a co-owner. Only then will Medicaid be satisfied that it isn’t Mom’s.”
Mary Jane listened carefully. “So, is that it”, she asked. No, actually there was more.
If we are successful in showing Medicaid that it isn’t Mom’s account, then the transfer of Mom’s income to that account to help pay the bills would now be a transfer for less than fair value. Why is that? Because Mom is transferring money out of her name to an account that we have just proved is Mary Jane’s, not Mom’s.
Isn‘t Mary Jane then caught up in a classic Catch-22? She seems to lose either way. Well, no. Not really. There is a way out. Remember, the money transferred to the joint account is Mom’s share of the household expenses. As long as we are able to prove by a clear paper trail what that money was spent on, then Medicaid won’t assess a penalty.
I asked Mary Jane if she is able to do all that. She was hesitant to reply. She told me she hadn’t kept detailed records with the expectation that she would need to prove all this to anyone. But, she said she would do her best.
“As long as we can back up what you are saying with a clean paper trail”, I told Mary Jane, “then we should be able to straighten out your Medicaid denial.” Mary Jane certainly had plenty of motivation to get to work. The$ 40,000 nursing home bill that Mom owes would motivate just about anyone.