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My Mom recently entered a nursing home in a Medicaid pending bed. Six months ago, to make some interest income on the $30K that was sitting in a savings account jointly owned by her and me, I transferred the $30K to a CD that I didn't realize only had my name on it. Should I (1) simply return the $30K to the joint account to "cure" the asset transfer, and use it to spend down for a few months as private pay for the nursing home until eligible, or (2) apply to Medicaid now and accept the penalty, which would involve paying the same amount of private pay funds to the nursing home? I'm concerned that if I do (1), Medicaid will still penalize me for doing the transfer in the first place.

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I think a consult with an elder law/estate planning attorney who is very well versed in Medicaid will be money well spent.
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It’s not you who is penalized, but your mom.
It is technically is her problem as she’s the one who will or has applied for Medicaid. It’s not if $13456.00 was gifted or transferred that $13456.00 gets deposited back into her bank account that it’s fixed. Transfer penalty is not $ to $ but rather basically will be a # of days of ineligibility based on whatever your state Medicaid pays a facility as the daily room & board reinbursement rate.
It’s days based on dollar amount.

so exactly what is her status.... is she private pay and no Medicaid application filed?
or has she actually applied? You wrote she’s in a Medicaid Pending bed. So does that mean an application has been filed?

if she’s filed, personally I’d let it roll thru caseworker evaluation of the application and do whatever state determines has to be done to resolve the penalty period. Like if state day rate is $185, then 30k is basically 162 days or 5 1/2 months of private pay needed. Which you will pay directly to the NH out of your $ for her to be a resident till the penalty period is done. Realize NH does NOT have to charge mom the reduced Medicaid day rate. It could be full tilt private pay rate$.
Also I’d be concerned it you put 30k into her account, it throws her banking to show increased income & assets which gets paperwork even more confusing.

if no Medicaid application filed, I’d be upfront with admissions about what you did and ask them what path is best. It may be that mom will need an elder law atty to shepherd her application.

also be expecting not to have your story believed..... just sayin’
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bellairebill Dec 2019
Thanks igloo572 for your detailed reply. Yes, I realize that my mom would be penalized, not me. She has not yet filed for Medicaid, as she still has more than $2000 in assets. So my question is more about what I should do to prepare for the Medicaid application.

According to Texas law I-5700, "if the transferred asset is subsequently returned to the individual, the transfer is nullified and the penalty period is erased retroactive to the initial month of penalty. The asset is treated as though never transferred, and is excluded or counted, as appropriate, in determining the client's eligibility for those months in which the asset was in someone else's possession."

That sounds like the asset transfer can be "cured" with no penalty. So it seems that (1) either the CD can be transferred back to her, and she can private pay for the 5-6 months and then apply for Medicaid once the $30K is spent, or (2) the $30K stays in the CD, she applies for Medicaid next month (when her own assets go below $2000), the penalty is applied, and I liquidate the CD and pay the NH for the 5-6 months. Assuming that Medicaid recognizes their own law, doesn't (1) make more sense, particularly if there are other expenses (legal, hearing aid, etc) that can be used for spend down?

As per whether Medicaid will believe my story, if the assets are restored to the joint account, does it really matter (assuming that law is recognized)? It doesn't seem like they can penalize her for the asset transfer if they are returned.
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I'd let it roll, let Medicaid deal with it, believe me, they will. They understand that Medicaid is confusing to lay people, it is routine for them. Now, if it were over 100K my advise would be different, that would be a big red flag to them, they would then be addressing fraud and digging deeper.

In the meantime, the CD is drawing interest which will increase what she has to self pay. I would place her as soon as possible, run through her money, and a few months before she is out, apply for Medicaid. You will cash in the CD and use for her well-being, problem solved a nice clean trail of her assets.
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Here's another perspective.

Mother and son hold a $30K savings account, jointly.

Son transfers the $30K to CD in his name only.

Notwithstanding the fact that you "didn't realize" the account wasn't jointly titled, what do you think the appearance of this transfer is?   I.e., that you've confiscated funds belonging to your mother.   Self dealing might also be an appropriate conclusion.   Theft, potential fraud, and financial abuse of an elder could come into play.

You have a bigger issue to address than how to handle the transfer of the funds, and I would focus on this before any issue of self dealing, fraud or inappropriate handling of joint funds is raised.   And get legal counsel to advise how to make this right and protect your mother's funds.  

I'm surprised any bank would participate in this kind of "transaction."

Another issue that concerns me is that your profile states your mother has dementia and Alzheimers.   Depending on her mental state at the time, the issue could be raised that she wasn't cognizant enough to be aware of the transfer, its effect, and/or consent or disagree, raising the issue of your having acting solely on your own decisions.  

I'd get this straightened out before even considering getting Medicaid involved.  
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DarkSeaglass Dec 2019
My understanding, having gone through medicaid spend down for my mother to qualify for Medicaid this part summer, is quite different. I worked with a specialist--an eldercare lawyer who specializes in estate planning.

Long story short, technically, if the money was jointly held in an account, you're perfectly legally within your rights to withdraw all of it and spend it however you like. That's legally. Again, if your name is one of the names on the account you can empty it out and buy $30,000 worth of cookies, if you want.

For Medicaid, here in Michigan, if the account was jointly held, and you took it out, then that's considered gifting, and you'd either have to 1) prove you spent it on her, or 2)incur a penalty period of ineligibility before mom qualifies for Medicaid. Medicaid considers every dollar in a jointly held account as an asset of your mom's. All of it--not half yours half hers. Again, this is how it is in Michigan, per the lawyer I worked with.

Whether it would help you to "put it back" I don't know. But I wanted to let you know my understanding is you did nothing wrong, legally. And the bank couldn't have stopped you if they wanted to--because technically you have every legal right to the funds in that account.
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Seaglass, thanks for your perspective.  I'm in Michigan too, but am not familiar with the terms you stated.     Sometimes it's hard to compare situations b/c not all the relevant facts are known, so I don't challenge you.   But it certainly shocks me, especially the joint ownership issue.    That's definitely not my understanding.

However, I appreciate your sharing this information, and doing so politely.


Worried, I'm also responding in the mainstream, also b/c I think your question is very relevant.   And I think I might not have been too clear.  You wrote:

"Garden, I am confused because you start out saying the account was jointly held. But then you say also say it wasn’t jointly held. The OP in fact says the account WAS jointly held so I don’t see how he did anything wrong? He was co-owner of the account."

Was this the statement of mine to which you refer:

"Notwithstanding the fact that you "didn't realize" the account wasn't jointly titled, ...."

If so, I understand the issue.  I was referring in this quoted statement to the NEW account, titled only in the OP's name.    And presumably the ENTIRE account balance was then, newly retitled in a CD in his name only.  

This was the jist of my concern.   He wasn't sole owner, he was co-owner of the savings account, but the new CD wasn't configured that way.     So essentially his mother's interest literally vanished in the new CD.    

It's my understanding (perhaps wrong) that joint accounts can't be transferred to a new account w/o the consent and signatures of both co-owners.   I don't recall the specific instances, but something like this did arise when we transferred funds from some accounts several years ago.   

I can see how that created confusion; I had to read it several times myself!   If this doesn't resolve the issue, post back and I'll see what I can do to be more clearer.  Actually, right now I'm getting confused myself!  

When my brain is a bit clearer I'll see if I can find a legal source for this issue. 
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worriedinCali Dec 2019
Thanks for the clarification Garden! I understand now. The way you originally worded it was a bit confusing. It’s the CD account that is now solely in the OPs name & that’s what your statement was referring too!
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