Medicaid “Transfer” Is Incomplete Until Joint Owners Withdraw Funds


Dora Steinberg was 76 years old when her husband died. She decided that she should put her children’s names on her account. Right after her husband’s death in 1983 she opened a stock brokerage account with Dean Witter Reynolds with about $120,000. The account was titled in three names: her own, her son George Steinberg’s and her daughter Marsha Gross’.

Eleven years later several things had changed. For one, Ms. Steinberg’s investments had performed handsomely and the Dean Witter account was now worth over $240,000. Ms. Steinberg was not doing well herself, however, and it looked like she might need to move into an assisted living facility or nursing home.

In January, 1995, Ms. Steinberg’s children withdrew $190,000 from the Dean Witter account and placed the proceeds in accounts in their own names. Six months later, Ms. Steinberg moved into the Saunders House Nursing Home. Just over a year after that, Ms. Steinberg applied for Medicaid assistance with the cost of the nursing home.

The Pennsylvania Medicaid agency denied Ms. Steinberg’s application. According to the agency, Ms. Steinberg had not transferred control of any of the money until the children withdrew funds in 1995. By Ms. Steinberg’s reckoning, the transfer had occurred when she first placed her children’s names on the account.

After several administrative review hearings Ms. Steinberg appealed the denial of benefits to the court. Nearly three years after the initial Medicaid application, the courts agreed that she was not entitled to Medicaid when she first applied.

When a Medicaid applicant has made a gift within the three years before the application is filed, he or she will be ineligible for benefits for a calculated period. The length of that ineligibility is determined by dividing the total value of gifts by the average cost of nursing home care in the state (or region of a state) at the time of application. In Ms. Steinberg’s case, that calculation meant that she would not be eligible for Medicaid benefits until October, 1998—three years and ten months after funds were removed from the account. Steinberg v. Dep’t of Public Welfare, September 12, 2000.

Although she likely would have been ineligible anyway, it did not help that Ms. Steinberg’s Social Security number was listed on the account, and that she had paid all the taxes on the account’s income from the beginning. That was viewed as additional evidence that she had not really made a completed gift of all but $40,000 (as she alleged) when she first established the account.

The process is identical in Arizona, albeit with different numbers. While the value of Ms. Steinberg’s “gift” was divided by about $4,600, in Arizona the divisor would have been $3,352.91. In other words, Ms. Steinberg would not have been eligible in Arizona until September, 1999.

One irony: if no application had been filed for Medicaid assistance until after January, 1998, she would have been immediately eligible. By rushing to secure eligibility, Ms. Steinberg ended up paying privately for an additional ten months of nursing home care.

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