How is Co-Ownership Treated by Medicaid?
Joe was confused. He told me his mom had added his name as co-owner on her bank account more than 5 years ago, after he spoke with his friend, John who explained that by adding his name to the deed to his mother’s home, he had protected the home when it came time to apply for Medicaid. “So why”, Joe asked me, “did the New Jersey Medicaid office tell me that the bank account is still countable and must be spent down before she can qualify for Medicaid?”
I explained that the home co-ownership is treated differently than bank account co-ownership. Joe’s mom has the ability to withdraw all the money in her bank account, even though Joe co-owns it. She hasn’t relinquished control of the account, therefore, Medicaid will count the entire amount as part of her countable assets, subject to be spent down before she can qualify for Medicaid.
On the other hand, John’s mom did relinquish control of part of her home when she put his name on the deed. She could not sell 100% of the ownership without his agreement. She could only sell the half she still owned. The other half had been transferred out of her name and was not counted as her asset from that point because she had relinquished control of it.
Of course, the transfer still is subject to the 5 year look back. There would still be a Medicaid penalty – an ineligibility period – if the application is filed within 5 years after the transfer is made. But after that, the transfer would not be considered for eligibility purposes.
Joe listened intently and then realized his mistake. “I guess I should not have relied on my friend’s advice”, he replied. I agreed. “No two situations are exactly alike”, I told him. You can’t simply look at someone else and say “I’ll do exactly as he does”. What appears to be the same to the untrained eye simply isn’t. It’s best to consult with someone knowledgeable of the ins and outs of Medicaid, such as an experienced elder law attorney before taking any action.