When caring for an aging parent or a disabled loved one, convenience and simplicity is usually the goal, especially when it comes to managing money. Many families find it convenient to add a parent’s name to a college aged child’s account or an adult child’s name to an aging parent’s account, assuming this is a smart way to deposit money and manage bills.
However, in the world of New Jersey Medicaid, this convenience can become a costly crisis. When a loved one needs to apply for Medicaid, that joint account might be the very thing that triggers a denial.
The Rule You Need to Know: N.J.A.C. 10:71-4.1(d)2
New Jersey Medicaid doesn’t view joint accounts the way you do. Their treatment of these funds is governed by N.J.A.C. 10:71-4.1(d)2. The regulation states:
When a savings or checking account is held by the eligible individual with other parties, all funds in the account are resources to the individual so long as he or she has unrestricted access to the funds (that is, an “or” account), regardless of their source. When the individual’s access to the account is restricted (that is, an “and” account), the county welfare agency shall consider a pro rata share of the account toward the appropriate resource maximum, unless the client and the other owner demonstrate that actual ownership of the funds is in a different proportion.
This regulation establishes a harsh default presumption: If your name is on it, you own it.
The impact on eligibility depends entirely on one small word on the bank statement: “or” versus “and.” If an account is titled with “or,” the applicant has “unrestricted access” to the funds. Under the law, 100% of the balance is counted as a resource for the Medicaid applicant. It doesn’t matter if the non-Medicaid applicant deposited every cent of that money. Medicaid assumes the entire balance belongs to the person applying for benefits. If the account is an “and” account that requires both signatures for a withdrawal, Medicaid typically counts a pro rata share (usually 50/50) toward the applicant’s resource limit. While this is slightly better than the “or” scenario, it still places the burden of proof on you to show that the ownership should be divided differently.
With Medicaid resource limits being extremely low, ranging from $2,000 to $6,000 depending on the program and marital status, counting accounts with funds that really don’t belong to the Medicaid applicant can present a real problem.
Can You Fight the Presumption?
Whether the account it titled “and” or “or,” the County social services agency reviewing the Medicaid application will not simply take your word for it. To prove the money doesn’t belong to the applicant, you must provide clear documentary evidence that proves the applicant does not own the money. This includes copies of checks and deposit slips showing where the funds originated as well as a detailed paper trail of how the money was spent. If you can show that all the money coming in and out belonged to and was spent on the non-applicant you may be able to convince the County case handler to disregard the account. Even with solid evidence the County social services agency reviewing the application may still take a hard stance, count the funds toward the resource limit, and deny the application. In sum - rebutting these claims is most often an uphill battle. Absent clear proof, the County will count the funds against the applicant.
The Better Way: Power of Attorney
A joint bank account is not an asset-protection strategy and not a good way to manage an aging or disabled individual’s money. If the goal is to help a loved one manage their income and pay bills, the proper tool is a Power of Attorney (POA). A POA allows you to manage the funds without making those funds yours in the eyes of Medicaid. It provides the same convenience without the massive eligibility risk.
The Bottom Line
Adding a name to an account without legal guidance is a common mistake that creates a mountain of paperwork to undo. Effective Medicaid planning requires understanding how New Jersey actually applies its regulations, rather than relying on assumptions.