For generations, savings bonds have been purchased for newborns and retirees alike as an investment in the future. While savings bonds aren’t a complex investment vehicle, bonds that aren’t properly handled can cause Medicaid ineligibility.
Here’s a common scenario:
“My dad owns savings bonds; he bought them years ago and added my name to them when his health started declining, so they are payable to me or him. He is now in a nursing home and needs to apply for Medicaid – do these savings bonds count against him? Since I’m a joint-owner, can I cash them so they aren’t an available resource?”
First, it is important to note that savings bonds are a countable resource – the Pennsylvania Medicaid application explicitly names U.S. Savings Bonds as a resource to report. Additionally, savings bonds list the owner’s social security number, which means savings bonds can be tracked through the Treasury department and linked to a Medicaid applicant.
Although the savings bonds are payable to either you or your father, the state may consider the bonds an available resource for your father, because he can redeem them himself. In Pennsylvania, if a Medicaid applicant can sell a jointly-owned resource without the other owner’s consent, the applicant’s share of the resource is presumed available to the applicant. An applicant’s share of a jointly-owned liquid resource is determined by the applicant’s contribution to the resource; this is a very fact-specific determination, but because your father purchased the bonds, the entire value will likely be considered available to him.
If you cash the savings bonds now, the state may consider the action a gift from your father to you, and he will incur a period of Medicaid ineligibility. The determination of whether this will be considered a gift depends on the circumstances, so it is important to proceed with caution.
Given the complex nature of these resources when it comes to Medicaid eligibility, it is important to seek expert advice. By consulting with a certified elder law attorney, you can learn how your resources are characterized and develop a Medicaid Planning arrangement that best serves your needs.