What Happens to a Joint Bank Account When One Spouse Goes to a Nursing Home?

When one spouse enters a nursing home, finances can quickly become a source of concern. If you and your spouse share a checking or savings account, you may wonder: What happens to that money? Can the spouse at home continue using it? And will the entire account be considered countable when applying for Medicaid?

A spouse entering a nursing home does not automatically mean a joint bank account is frozen or taken away. However, if Medicaid will be needed to help pay for long-term care, jointly held funds can affect financial eligibility. Understanding how Medicaid treats joint accounts—and the protections available to a spouse who remains at home—can help families avoid unnecessary financial stress.

Read more: Is It Too Late for Medicaid Planning If Care Has Already Started?

Does a Joint Bank Account Count for Medicaid?

When someone applies for long-term care Medicaid, the state evaluates the applicant’s financial resources. A joint bank account may be considered during this process even if both spouses have access to the money. For married couples, Medicaid generally considers the couple’s combined countable resources when one spouse applies for long-term care benefits. This means simply keeping savings in an account with the community spouse’s name on it does not necessarily prevent those funds from being considered.

Rules can vary by state and situation, so families should avoid assuming that changing names on an account will solve an eligibility problem.

What Happens to the Money When One Spouse Enters a Nursing Home?

Entering a nursing home by itself does not determine what happens to a couple’s joint savings. The bigger financial change occurs when the institutionalized spouse applies for Medicaid. At that point, the couple’s countable assets are evaluated to determine eligibility. Medicaid’s spousal impoverishment protections are designed to prevent the spouse who remains at home—known as the community spouse—from being left without adequate financial resources.

These protections can allow the community spouse to retain a portion of the couple’s countable assets rather than requiring the couple to spend down everything before the nursing home spouse can qualify.

Read more: How to Handle a Nursing Home Crisis When Your Loved One Has No Long-Term Care Insurance

Understanding the Community Spouse Resource Allowance

One of the most important Medicaid protections for married couples is the Community Spouse Resource Allowance (CSRA). The CSRA establishes how many countable assets the community spouse may generally retain when the other spouse qualifies for long-term care Medicaid. The applicable amount depends on current Medicaid rules and may also vary based on the couple’s circumstances and state of residence. However, the CSRA is separate from the institutionalized spouse’s allowance and can often exceed $100,000.

This is why it’s important to look at the couple’s overall financial picture rather than focusing solely on whose name appears on a particular account.

Should You Remove the Nursing Home Spouse From the Account?

Fortunately, Medicaid does not penalize transfers made between spouses, so any funds in a joint marital account can be transferred to the community spouse without penalty. However, families should be cautious about moving money before understanding the Medicaid implications. For example, retirement accounts owned by one spouse cannot be transferred. Before retitling accounts or transferring significant amounts of money, make sure to speak with a Medicaid planning professional or elder law attorney.

What If the Couple Has Too Much Money to Qualify?

Having more than Medicaid allows does not necessarily mean a couple must spend all their savings on nursing home bills before qualifying for benefits. There may be Medicaid-compliant strategies for addressing excess countable resources. Depending on the couple’s circumstances, those strategies could involve spending funds on allowable expenses or converting certain countable resources into another form.

A Medicaid Compliant Annuity (MCA), for example, can convert a lump sum of countable assets into an income stream while satisfying specific Medicaid requirements.

Take the Next Step

If your spouse has entered a nursing home and you’re concerned about how your joint savings could affect Medicaid eligibility, our team can help. Contact us today to review your financial situation and explore the Medicaid planning strategies available to you.