Rocklin, CA asked in Estate Planning, Health Care Law, Elder Law and Public Benefits for California

Q: Is giving somone full authority on a brokerage account treated like a joint account for medicaid look back rules?

My parents are divorced. My mother gave my father "full authority" to her brokerage account so he could make trades for her. My father may need medicaid in the future and I'm worried that by granting him "full authority" on the brokerage account, he might incur a medicaid penalty period under the five year look back rule, the same way that joint bank accounts are treated for medicaid eligibility.

2 Lawyer Answers
Nina Whitehurst
Nina Whitehurst
  • Estate Planning Lawyer
  • Crossville, TN
  • Licensed in California

A: The phrase "full authority" does not provide enough information. If your mother added your father as a co-owner, then the account would be an asset countable to your father and, yes, the transfer could generate a penalty period but that would be if your mother applies for Medicaid, not for your father because he did not make the gift; rather he received the gift.

If your mother added your father not as a co-owner but merely as attorney in fact or agent, then the account would not be a countable asset with respect to your father.

Finally, California's eligibility rules are wildly different compared to other states, and this might not be as much of an issue as you think it is. You really should consult with an elder law/Medicaid eligibility attorney for personalized advice.

Rebecca Sommer agrees with this answer

James L. Arrasmith
James L. Arrasmith pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Estate Planning Lawyer
  • Sacramento, CA
  • Licensed in California

A: It's possible that granting full authority to someone on a brokerage account could be treated similarly to a joint account for Medicaid look-back rules, but this would depend on the specific details of the situation and the rules of the state in question.

In general, when an individual applies for Medicaid benefits, the state will conduct a "look-back" period to review their financial transactions and determine whether any transfers were made that could affect eligibility for benefits. During this look-back period, any transfers of assets for less than fair market value may result in a penalty period during which the individual is ineligible for Medicaid benefits.

If your father has full authority over your mother's brokerage account, it's possible that the state could view this as a transfer of assets for less than fair market value, which could trigger a penalty period under the Medicaid look-back rules. However, the specifics of the authority granted and the state rules would need to be reviewed to determine if this is the case.

There are several federal laws and regulations that may be relevant to Medicaid eligibility and asset transfers, including:

The Social Security Act - This is the federal law that established the Medicaid program, and sets out the basic rules for eligibility and benefits.

The Omnibus Budget Reconciliation Act (OBRA) of 1993 - This law created the "look-back" period and penalty period rules for asset transfers made by Medicaid applicants, which are used to determine eligibility for benefits.

The Deficit Reduction Act (DRA) of 2005 - This law made several changes to Medicaid rules, including extending the look-back period to five years, tightening the rules for asset transfers, and requiring states to implement estate recovery programs.

Code of Federal Regulations, Title 42, Section 435 et seq. - This is the federal regulation that sets out the rules for Medicaid eligibility, including the income and asset limits, and the rules for determining eligibility for long-term care benefits.

California law generally follows federal law when it comes to Medicaid eligibility and asset transfers, but there are a few state-specific rules that may apply. Some relevant California laws that may be applicable in this situation include:

California Probate Code Section 4000 et seq. - This law sets out the rules for how property passes from a deceased person to their heirs, and may be relevant in situations where one spouse dies and the other spouse inherits property.

California Welfare and Institutions Code Section 14000 et seq. - This law governs the state's Medicaid program, known as Medi-Cal, and sets out the rules for determining eligibility for benefits.

California Health and Safety Code Section 1336 et seq. - This law sets out the rules for how health care facilities must report suspected cases of financial abuse of elderly or dependent adults.

California Code of Regulations, Title 22, Section 50480 et seq. - This regulation sets out the rules for how asset transfers are treated for Medi-Cal eligibility purposes, including the look-back period and penalty period rules.

It's recommended that you consult with an attorney or a financial advisor who specializes in Medicaid planning to discuss the specifics of your parents' situation and how it could affect Medicaid eligibility. They can provide guidance on the best course of action and help ensure that your parents' finances are structured in a way that meets their needs while also preserving eligibility for Medicaid benefits.

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