Contemplating a stay in a nursing home is certainly an unpleasant thought. On top of needing the care, you have the financial concern of having to pay the bill. Unless you have purchased private long-term care insurance, you may be faced with depleting the family’s resources in order to pay the nursing home costs. Once the family’s moneys are spent, however, then the government’s Medicaid program will cover the charges.
Medicaid is the federal program administered by the states that provides medical benefits to those with limited assets. If your income and resources fall below the established minimums, you qualify for Medicaid and your nursing home expenses are paid by the government. In the past, married couples were forced to spend most all of their combined savings before either qualified for the program. This meant that the healthy spouse who was still at home was left essentially penniless. However, now the Medicaid rules include certain “spousal impoverishment” provisions. Under the “spousal impoverishment” provisions, the spouse at home gets to preserve certain resources when the other spouse enters a nursing facility.
The “spousal impoverishment” rules first come into play when one spouse enters a nursing home and is expected to be in the home for at least 30 days. If that’s the case, the couple is entitled to a so-called “resource assessment”. The resource assessment is done by submitting a form to the county assistance office. On the form you list the assets owned by the spouses as of the date the one spouse was admitted to the nursing home. However, certain assets are to be excluded. The most significant exclusions are for the couple’s residence, household goods and personal effects and (in Pennsylvania) the healthy spouse’s IRAs.
After the resource assessment form is submitted, the couple will be notified of the “spousal share”. The “spousal share” determines the amount of assets that the healthy spouse gets to keep. In basic terms, the “spousal share” is one-half of all of the assets listed on the resource assessment. For example, if the assets listed on the resource assessment total $120,000, the spousal share would be half of that or $60,000. This means the spouse who is still at home gets to retain $60,000 without affecting the other spouse’s eligibility for medical assistance.
In addition to the $60,000, the spouse at home also gets to keep the couple’s residence and all other exempt assets. The resources in excess of the $60,000 spousal share may be spent on the nursing home care or on anything else that benefits either spouse.
There are, however, certain maximum and minimum limits on the spousal share. These limits are adjusted annually to keep pace with inflation. This means that the 2020 minimum in Pennsylvania will increase to $25,728 (it was $25,284 in 2019) and the 2020 maximum will increase to $128,640 (up from $126,420 in 2019). As such, if the couple’s countable assets are $300,000, the spouse at home gets to retain just $128,640, plus the exempt assets, and not one-half of the total. Likewise, if the countable assets were $45,000, the spouse at home would get to keep the $25,728 minimum, plus any exempt assets.
In general, no special action is needed to request these basic spousal protections. However, if you wish to protect additional assets, you should seek expert advice before you consume those assets to pay for your spouse’s care. Under current law, almost all married couples can qualify for Medicaid without having to spend-down assets, but it requires prompt action AFTER one of the spouses enters a nursing home. That’s right, you can still protect assets even AFTER the person enters the nursing home!
These rules are designed to make sure that the spouse in the community is not rendered penniless by having to deplete all of the couple’s resources to pay for a nursing home stay. In addition to the rules that permit the healthy spouse to preserve assets, there are “maintenance allowance” rules that make sure the healthy spouse has sufficient income to live. Examples of income are social security, pensions, interest, dividends and other periodic payments. Under the income rules, the healthy spouse gets to keep all of the income that comes in their name. In Pennsylvania, if the healthy spouse’s income is below the minimum, then under certain circumstances, the spousal share can be increased to produce the extra income, or some of the income of the spouse in the nursing facility can go to support the spouse at home. I look at the “maintenance allowance” rules in another article.