There are many misconceptions surrounding Medicaid long-term care. One persistent myth is that a couple will lose all of their assets if one of the spouses applies for Medicaid to pay for a nursing home. This could not be further from the truth – applying for Medicaid long term care for one spouse makes sure the “well” spouse does not become impoverished.
Medicaid is a means tested program, so applicants must meet certain income and asset requirements. In 2022, to be eligible for Chronic Medicaid (the program which assists in paying for Nursing Home Care) applicants may have up to $16,800.00 in resources. In addition, the applicant can own qualified retirement accounts in any amount so long as they are taking the required minimum distributions (RMD). RMDs are based on the life expectancy table used in the specific county where one is applying for Medicaid. A life insurance with less than a $1,500 cash surrender value is also allowed. Finally, an irrevocable pre-arranged burial account is an exempt asset.
Despite these strict requirements, there are protections for spouses who remain in the community. The government recognizes that the worst-case scenario is one spouse using up all the couple’s assets to pay for long term care and then having no funds for the left for the second spouse to live. Therefore, the guidelines are different for married couples.
When a Medicaid applicant is married, the guidelines permit community spouses to retain up to $137,400.00 in liquid assets. Additionally, a primary residence is exempt so long as the community spouse is living there. Assuming your husband has assets which exceed $16,800.00, these assets can be transferred to you to bring him below the Medicaid threshold amount.
New York’s spousal refusal provisions provide even more protection. The community spouse can elect to sign a document which allows them to keep assets above the $137,400.00 threshold. This includes assets which were previously in the name of the spouse that requires care in a nursing facility. Spousal refusal is a formal statement declaring that the well spouse requires the assets to live.
Medicaid treats income differently than assets. An applicant for Chronic Medicaid may only keep income in the amount of $50.00 per month. Any excess income goes to the nursing home toward cost of care. Medicaid pays the rest. The community spouse may keep $3,435.00 per month of income. Any of their income above that amount must go to the spouse’s cost of care in the nursing home. If the community spouse’s income is less than this maximum, part of the Medicaid recipient’s income can be used to bring the well spouse to the $3,435.00 limit. If the community spouse’s income exceeds the maximum, spousal refusal is available to avoid contributing to the cost of care.
Another option to consider is the Community Medicaid program. This Medicaid program pays for care in your home so you can Age in Place. Under this model, the asset rules stay the same, but all income can usually be retained. Under Community Medicaid, the general rule is that the applicant may retain a monthly income of $934.00 plus a disregard of $20 bringing the total to $954.00. However, any excess income can be directed to a Pooled Income Trust for the benefit of the Medicaid applicant. Excess income over the $954.00 is deposited into the Pooled Income Trust and can be used to pay the household expenses of the Medicaid applicant.
The eligibility rules change each year, so be aware that ever-shifting Medicaid eligibility rules and exceptions may be difficult to follow. In order to review your specific circumstances, please contact an elder attorney. Even on the eve of needing nursing home care, there are steps we can take to get one spouse the care they need while protecting assets for the family.