Since it has been awhile since we covered the “basics” of Medicaid planning for married couples, and since the rules and regulations that apply change over time, we thought our readers might appreciate a “refresher course” on the subject.
Although a nursing home resident is only entitled to keep a small amount of “countable assets” ($2,000.00 inIllinois; $999.99 inMissouri), a “community spouse” (one who isn’t in a nursing home) is entitled to keep additional assets.
In Missouri, the determination of the amount of assets the community spouse will be allowed to keep is determined by a “division of assets” process. A “Declaration and Assessment of Assets” form is completed showing the combined value of all of the couple’s assets, whether owned together or owned individually by either spouse, as of the date the spouse in the nursing home was admitted. The rules then allow the community spouse to keep half of those countable assets, subject to a minimum of $21,912 and a maximum of $109,560 (as of November 1, 2011; those amounts should increase, like Social security payments, by 3.6% for 2012). In some cases, a community spouse can be awarded a greater share of the assets by obtaining an administrative “fair hearing” or through court proceedings.
InIllinois, the division of assets process is unnecessary and not used. The community spouse is automatically entitled to keep assets up to the $109,560 (for 2011) maximum.
In either state, the spouse in the nursing home is only entitled to keep $30 of income per month. However, the community spouse is entitled to keep additional income. InMissouri, the minimum is $1,822 and the maximum is $2,739 (again, those are 2011 figures, and they should increase by 3.6% for 2012). Income above the minimum is awarded when monthly shelter expenses exceed $525, utility costs exceed $262, or other extraordinary expenses can be shown. InIllinois, the community spouse is automatically allowed the $2,739 (for 2011) maximum.
However, the fact that a married couple’s assets and income fall within those allowances does not guarantee a determination of eligibility. The “transfer penalties” which can cause ineligibility for benefits based on transfers of property to children or other third parties apply to married persons as well as single ones. Further, a transfer of property by either spouse can affect the eligibility of the one who applies for benefits.
Just about every married couple should consider Medicaid planning when one spouse enters a nursing home or that is likely to happen. In almost every instance, an elder law attorney skilled in Medicaid eligibility planning can develop a plan for a married couple that will enable that couple to protect more – often substantially more – than the above rules would suggest. The attorney can also help make sure that the couple does not unknowingly take actions that will cause problems at application time.
In many instances, the planning strategies available specifically to married couples, and other Medicaid planning techniques available to single and widowed people as well as married ones, work best if they are applied in combination. Every couple’s situation is different. What works best in one situation will not work nearly as well in another.
Even changing one fact can significantly impact the planning. For example, if either spouse is a war-time veteran, the planning might often (but not always) involve obtaining eligibility for VA “aid and attendance” pension benefits to help pay the cost of care until Medicaid eligibility can be established.
The order in which things are done is often critical toward achieving a good result. And, of course, not every strategy works in every situation. Further, just because something can be done because “it’s legal” to do it, doesn’t necessarily mean that it should be done. Medicaid eligibility planning is a very individualized process, and it’s critically important to have an experienced elder law firm direct and guide the planning.
In almost every instance, proper Medicaid planning will enable a married couple to protect substantially more of their assets than they could without planning. In some instances, all of a couple’s assets can be protected, particularly if the planning is started before the spouse who needs care enters the nursing home. The planning can include gifts to family members who will hold the money for the couple’s benefit – but only if it’s done “the right way,” with the guidance of an experienced elder law attorney. As we have mentioned in other articles, that’s true even if the person with care needs is already in the nursing home, despite the “look-back rule.”
Most married couples own a home, and unless planning is done to protect it, it can be lost to Medicaid “estate recovery,” which enables the State to recover Medicaid benefits paid to someone when that person later dies. Specific planning must be done to protect your home.
Another major concern, one which is often overlooked, is the risk that the “community spouse” will die first. Caregiver spouses most often have done everything possible to keep from having to put their loved one in a nursing home, and by the time that happens they tend to be exhausted and are in many cases in poor health. It’s not uncommon, especially in the case of older couples, for the spouse who isn’t in the nursing home to die before the one who is. If the caregiver spouse leaves all or most of her or his estate outright to the spouse in the nursing home – as most married people do, through wills, living trusts or joint tenancy – the death of the “community spouse” will then cause the spouse in the nursing home to become ineligible for Medicaid until the inherited assets are spent down.
Investing in proper Medicaid eligibility planning is one of the wisest decisions a married couple can make. The planning can help secure their financial future. They can assure that neither spouse will face the risk of a life of poverty after the other one dies. Finally, they can enable themselves to leave a financial legacy for their children or other loved ones.
If you face this situation personally, call or e-mail us today and we can help you get started with your planning. If you know someone else who does, call or e-mail us today and we’ll show you how easy we will make it for you to refer them to us for help.