*Updated August 2020
A common misconception of people researching the viability of Medicaid to pay for a Nursing Home is that the “well” spouse will be left with no assets. Despite Medicaid being a means tested program with strict income and asset requirements, there are protections for spouses who remain in the community.
In 2020, applicants for Chronic Medicaid (this is the program which will assist in paying for Nursing Home Care) may have up to $15,750.00 in resources in order to be eligible. In addition, the applicant may have qualified (retirement) accounts in any amount assuming distributions are being taken on a monthly basis. The actual amount of each distribution is based upon a chart used by the local Medicaid Agency which is similar to the IRS minimum distributions table. In Suffolk County, the distribution amount will be more than the amount required by the IRS and is based upon the individual’s life expectancy. Finally, an irrevocable pre-arranged burial account in any amount is an exempt asset.
Federal guidelines permit community spouses to retain up to $128,640.00 in assets plus a primary residence. Any assets which exceed the $15,750.00 allowance can be transferred to the community spouse up to the allowable limit. New York’s spousal refusal provisions provide even more protection in that a community spouse can elect to sign a document which allows him or her to retain assets in any amount, including assets which were previously in the name of the spouse that requires care in a nursing facility. This means that the community spouse can retain more than the $128,640.00 allowed under the federal guidelines.
Income is treated a bit differently. An applicant for chronic Medicaid may only retain income in the amount of $50.00 per month, everything in excess of that must be contributed to the cost of care. A community spouse is entitled to keep the greater of: (1) all of his or her income, or (2) his or her income plus enough of the spouse’s income to total a maximum allowable spousal income of $3,216.00.
To illustrate, if a couple owns a home, have $300,000.00 in non-retirement assets and $200,000.00 in retirement accounts and the spouse needing nursing home care has income in the amount of $3,000.00 per month and the community spouse has income of $2,000.00 per month, the plan would look something like this:
- The marital home and all but $15,750.00 is transferred to the community spouse.
- The nursing home spouse would take the required minimum distributions on a monthly basis as income (thereby protecting the principal).
- Community spouse would sign a spousal refusal to essentially protect the assets exceeding $128,640.00.
- With respect to income, the community spouse would keep his or her $2000.00 income and $1,216.00 of the nursing home spouse’s income – bringing the well spouse up to the allowable limit of $3,216.00. The nursing home would be entitled to a monthly contribution in the amount of $1,734.00.
Another option to consider is the Community Medicaid program, which allows the spouse needing care to receive nursing home level care in the community.