Whose money is it? I can’t tell you how many people I meet with who believe that a husband and wife’s assets are separate assets. Marriage is a partnership. When you’re an elder law attorney and you meet with people who have been married for fifty years or more, it’s fairly safe to say that just about every asset the couple owns is a marital asset.
The context in which I frequently meet with people has to do with Medicaid planning. A family member will come to see me and tell me that “Mom has these assets in her name” and “Dad,” who now needs care in a nursing home, ” has these assets in his name” or “has no assets in his name.” The thought is, dad will qualify for Medicaid benefits immediately because he has no assets.
Medicaid is a health insurance program for needy individuals. In order to qualify for Medicaid, a person must have a limited amount of assets and insufficient income to pay for his care. If an unmarried individual wishes to qualify for Medicaid, he must have less than $2,000 in assets. With a married couple, the spouse who does not require care, called the “community spouse,” can retain up to $115,000 in cash assets (approximately), plus the home, a car, and the personal property (furniture, etc.).
The $115,000 figure is a maximum figure of cash assets that the community spouse can retain. The community spouse can only retain the maximum amount of cash assets if the couple’s combined cash assets meet or exceed $230,000, which is double the $115,000 maximum. If the couple’s assets are less than $230,000, then the community spouse retains less than the maximum amount.
The reason the Medicaid laws permit the community spouse to retain $115,000 in assets is due to the fact that the Medicaid laws pool the assets of a married couple. In other words, whatever assets one spouse owns, as far as Medicaid is concerned, the other spouse owns. If the wife owns all the assets and the husband requires care in a nursing home, all of the wife’s assets count against the husband’s eligibility for the Medicaid program.
Even if the wife’s assets came to her by way of inheritance or gift, which would typically be exempt from equitable distribution in the context of a divorce, as far as Medicaid is concerned, those assets belong to the husband as well. It is because Medicaid combines the assets of the married couple that Medicaid permits the community spouse to retain the $115,000.
If Medicaid didn’t permit the community spouse to retain the $115,000, then the community spouse would be pauperized because the couple’s assets are combined and the spouse in the nursing home can only have $2,000. These facts would mean that the community spouse could only have $2,000 if the Medicaid laws didn’t permit her to retain the $115,000.
Another common misconception involves a parent adding a child’s name to a bank account. Many people have come to see me and said “I’m on mom’s bank account, so mom only owns half the account. The nursing home can only take half.”
These statements are incorrect. If mom added son’s name to mom’s bank account that holds mom’s money, then the money remains mom’s in its entirety. Simply adding another person’s name to a bank account does not transfer any portion of the assets in that account to the new joint owner as far as Medicaid is concerned.
The bottom line is, if it sounds too good to be true, it probably is. Medicaid is a very complex law. If people could skirt Medicaid eligibility simply by adding another person’s name to their account or transferring all of their money from the ill-spouse to the well-spouse, the laws governing Medicaid eligibility would have no meaning. There are planning techniques available, but they may require the assistance of a trained professional.