My mother, 85, recently added my name to her pension and retirement accounts in the hopes it’ll safeguard her Medicaid eligibility — but will it?

Take Katie, for example. She’s caring for her 85-year-old mom, whose mental health is declining, and fears she’ll soon need to move into a nursing home. With nursing homes' costs topping $100,000 a year — and in-home care around $75,000 — Katie is worried how she’ll cover it all. (1)

Katie's mom hopes to qualify for Medicaid, which covers nursing home and other long-term care costs that Medicare usually doesn't. But Medicaid is a means-tested program, meaning applicants can’t have more than $2,000 in countable assets or earn too much income. (2)

Katie is listed as a beneficiary on her mom's pension and retirement accounts. She wonders: will that help her mom qualify for Medicaid — and allow Katie to keep the money?

Joint ownership doesn’t protect assets

Even if Katie is a co-owner, those accounts are still considered her mother’s.

When the government reviews Medicaid eligibility, any jointly held accounts are counted unless there’s clear proof the funds don’t belong to the Medicaid applicant. For instance, if Katie and her mom have $20,000 in a joint account — even if Katie contributed $15,000 — Medicaid will assume the funds belong to both women equally unless Katie can prove otherwise with receipts and documentation. (3)

To qualify for Medicaid, Katie's mom would need to spend down those joint accounts before she can get coverage. If her pension income is too high, she also won't qualify — unless she uses that income to cover nursing home care and can show she can’t afford the full cost. (4)

If Katie's mom does qualify for Medicaid and still dies with assets remaining, Medicaid estate recovery rules may allow the state to reclaim some of the costs of her care. (5) Having Katie’s name on the account won’t protect that money. (6)

Medicaid is meant for people in genuine financial need, so the system includes safeguards to prevent people from hiding assets just to qualify. (7)

Protecting assets — but plan early

There are ways to protect assets while still planning for Medicaid eligibility, but timing is everything. Medicaid has a five-year “lookback” period to prevent applicants from transferring assets or income to qualify unfairly. (8)

That means if you give away or transfer assets to children, beneficiaries or a trust within five years of applying for Medicaid, you could face a penalty period before becoming eligible.