Planning for the Impact of Medicaid

One of the most complicated and fear-inducing aspects of Medicaid is the financial eligibility. The rules for the cost of long-term care are complicated and can be difficult to understand. This is especially true when the Medicaid applicant is married, reports Delco Times in the article “Medicaid–Protecting Assets for a Spouse.”

Generally speaking, to be eligible for Medicaid long-term care, the applicant may not have more than $2, 000 in countable assets in their name. If the applicant has a spouse, the well spouse or community spouse can have much more in countable assets in his or her name. In addition to countable assets, there are exempt or non-countable assets, such as your primary residence. However, in Massachusetts, most of your assets, such as bank accounts, IRAs, 401(k)s, life insurance policies, a second vehicle, vacation homes are countable assets. If you have countable assets in excess of $2, 000 or a total of $128, 420 for a married couple ($2, 000 for the institutional spouse + $126, 420 for the community or well spouse in 2019), the applicant would not be “otherwise eligible”.

This is just the analysis for assets. The complexity continues with an analysis of income. A healthy spouse may be concerned that there is not sufficient assets to live on if the spouse with health issues is in need of long term care. There are Federal laws that mandate certain protections for a spouse, so they do not become impoverished when their spouse enters a nursing home and applies for Medicaid. This is where advance planning with an experienced elder law attorney is needed. The spouse of a Medicaid recipient living in a nursing home, who is referred to as the Community Spouse, is permitted to keep as much as $126, 420 and a minimum of $25, 284, known as the “Community Spouse Resource Allowance, ” without putting the Medicaid eligibility of the spouse who needs long-term care at risk.

Determining the Community Spouse Resource Allowance requires totaling the countable assets of both the community spouse and the spouse in the long-term care facility, as of the date of admission to the nursing home. The date of admission is referred to as the “snapshot” date. The community spouse is also permitted to keep one-half of the couple’s total countable assets up to a maximum of $126, 420 in 2019 and no less than the minimum of $25, 284. The rest of the assets must be spent down.

Countable assets for Medicaid include most belongings, as stated above. However, there are a few exceptions as noted again above. These are personal possessions, including jewelry, clothing and furniture, one car, the applicant’s principal residence (if the equity in the home does not exceed $878, 000 in 2019) and assets that are considered inaccessible, such as an expected inheritance for an estate already created.

Unless an asset is specifically excluded, it is countable.

With regard to income, the community or well spouse is permitted to keep all of his or her 0wn income, regardless of the amount. The spouse that will enter a nursing home is permitted to keep only a portion of his or her income, with the remaining portion paid to the nursing home for care. In the case of a spouse, there are rules regarding the “claw back” of the institutional spouse’s income for the benefit of the community spouse. The rules regarding requests for additional income for the community spouse are also very complicated, so an elder law attorney’s help will be needed to ensure that the spouse’s income aligns with their state’s requirements.

Medicaid planning/eligibility is a complex and complicated issue, and not easily navigated. Talk with an experienced elder law attorney to help plan in advance, if possible. There are many different strategies for Medicaid applications, and they are best handled with experienced professional help.

Reference: Delco Times (June 26, 2019) “Medicaid–Protecting Assets for a Spouse”