Will Medicaid take all of his bank account?

A fellow caregiver asked...

I have been handling my uncle's affairs. He has recently gone on Medicaid and is now in a nursing home. He has about $7000 in a bank account with my name added for convenience prior to his admission and to pay hospital bills, expenses, etc. Will Medicaid take this money or do I simply hold on to it till he passes and is it part of his estate?

Expert Answer

Someone eligible for Medicaid nursing home coverage is usually permitted to keep only about $2,000 in cash assets (the amount varies a bit from state to state). If your uncle is eligible for Medicaid and now is receiving Medicaid nursing home coverage, Medicaid may require him to personally pay the cost of his nursing home care until his savings are down to $2,000. If Medicaid hasn't done that yet, it may be that Medicaid simply hasn't yet got around to the paperwork. Or, Medicaid may not realize that the $7,000 belongs to him rather than to you (because your name is also on the account). If Medicaid eventually does realize that the money belongs to your uncle, and so decides that he must spend most of it on the nursing home, Medicaid will notify him in writing. He then must use the money to pay the nursing home, or Medicaid could temporarily end his coverage until he spends that money on his care.

If Medicaid doesn't realize that the money belongs to your uncle, or for some other reason doesn't try to make your uncle to use that savings to pay for care, it still has the right to collect reimbursement from his estate after he dies. Medicaid is entitled to reimbursement for the full amount it will have spent on his care (which will, in a very short time, add up to much more than his total savings of $7,000). So, if you hold onto the money and Medicaid claims reimbursement after your uncle's death (usually by making a claim against the estate), Medicaid would be entitled to it under these rules. On the other hand, if Medicaid does not realize that the money belongs to your uncle, it might never try to collect anything from the estate, in which case the money could go to his heirs.