My cousin emptied out my grandmother's accounts and now she can't afford assisted living. How does this affect Medicaid eligibility?

1 answer | Last updated: Nov 17, 2016
A fellow caregiver asked...

My 78 year old grandmother is currently in a rehab facility. My cousin was handling her bills and we were aware that her name was on my grandmother's checking account. My mom got a power of attorney because we were trying to get my grandmother into an assisted living facility. When mom went to the bank to check her finances, she was told my cousin withdrew almost all the money from her checking account and cashed in a CD at a penalty that also had my cousin's name on it. We have no idea what to do next. My grandma can't go to the assisted living now with no money, so if my grandmother applies for Medicaid what will happen since her accounts were emptied? Will they make my cousing pay back the money or is it hers free and clear since her name was on the account? If Medicaid imposes a penalty, what is my grandmother to do since she can't pay during the penalty phase and neither can we. Please give us any advice you can.

Expert Answers

Let's start with the legality of what your cousin did. Just because her name was on your grandmother's account does not necessarily mean that the money also belongs to your cousin. If the money was actually your grandmother's and not your cousin's, then your cousin's taking of the money may be illegal. But this may depend on what your cousin did with the money -- if she spent it or invested it elsewhere for your grandmother's benefit, it might be perfectly legal (even if it wasn't smart). Or, your cousin may claim that your grandmother gave the money to her, or gave your cousin permission to use it, as a loan. Or, your cousin may claim that most of the money truly belonged to her. Sorting out the legal questions surrounding whose money it was may require help from a lawyer. If you or your grandmother cannot afford to hire a lawyer to straighten out this mess, you can contact the office of the Public Guardian in the county where your grandmother lives.The Public Guardian is a government (usually county) official whose job is to protect vulnerable people, including the elderly, from the kind of thing you suspect about your cousin. Call your local county offices and ask for the contact information for the Public Guardian. You might also contact the District or Prosecuting Attorney's office in your county -- if it's clear that your cousin knew the money was your grandmother's, and your cousin took it and spent it without permission, then it might be theft -- an actual crime.

Now let's consider Medicaid. Eligibility for Medicaid requires that a person have low income and few assets. And as to eligibility for nursing home care, Medicaid looks to financial transactions in the five years prior to applying to determine whether the applicant has given away assets that could have been used to pay for her own care. If large assets have been given away, there may be a penalty imposed, in the form of a delay before Medicaid will start paying for the nursing home. In your grandmother's case, Medicaid will have to determine several different things. First, it will have to determine whether the money -- or how much of it -- actually belonged to your grandmother and how much belonged to your cousin. Then, as to the amounts that belonged to your grandmother, it has to determine whether your grandmother gave the money to your cousin (in which case there could be an eligibility penalty) or your cousin took it without your grandmother's permission (in which case there should be no penalty).However, even if Medicaid determines that some of the money was your grandmother's and that your cousin took it without permission, it is not likely that they will try to get it back from your cousin. Medicaid has a mechanism to reclaim money out of an estate afterMedicaid beneficiary dies, but it does not normally work as a general collection agency. That task will still be left to you, through either a private attorney or the Public Guardian or District Attorney. (Also, bear in mind that if you manage to get the money back from your cousin after your grandmother is already on Medicaid, Medicaid will require her to use that money to help pay for her care.)

There's another thing to consider about Medicaid. In some states, the Medicaid program can cover residence in an assisted living facility as well as in a nursing home. If your grandmother is applying for Medicaid coverage of long term residential care, make sure to check with your state's Medicaid program to see if it covers assisted living as well, then find out what assisted living facilities near you participate in the Medicaid program. To find out what the rules are in your state, go online to any search engine and enter the word Medicaid and the name of your state. Or, you can get the information by calling the Eldercare Locator toll-free at 800-677-1116.