Many of my clients are concerned about what would happen if a spouse needs nursing home care.
The six-figure cost of care is worrisome for those who are married when a spouse has to go to a nursing home. In the example above, Tom has had some major health issues in the past year, and Louise is no longer able to care for him at home.
In this case, the couple lives in Pennsylvania, where nursing home care statewide is $126,420 a year ($342.58 per day). The state has a joint state-federal Medical Assistance program that will pay for nursing facility care if a person meets both the medical and financial criteria.
Tom has met one of the major Medical Assistance threshold requirements because he is “nursing home facility clinically eligible,” which means that a doctor has certified that, due to illness, injury or disability, Tom requires the level of care and services that can only be provided in a nursing home.
What will happen to their assets once a spouse needs nursing home care?
In 1988, Congress passed the Medicare Catastrophic Coverage Act, which created a process of allocating income and resources between a spouse who needs to live in an institutional setting and the spouse who can continue to remain in a community setting.
Tom and Louise’s resources are divided into two buckets: one that is exempt and the second that is non-exempt.
The family home, car, and cost of a pre-paid funeral, if that has been done, are exempt or non-countable assets.
Everything else, whether they own it together or individually, is considered non-exempt. In Pennsylvania, Louise’s IRA is the exception. However, that is not the same in Maryland or many other states.
Louise is entitled to keep one half of what they own, with a maximum of $126,420, as of January 1, 2019. This is her “community spouse resource allowance.”
Anything else they own is used to pay for Tom’s nursing facility care or purchase a very select group of “exempt” assets, like a replacement car or the cost of a prepaid burial.
They would have needed to give away their resources at least five years preceding an application for Medical Assistance. If they have given money away in an attempt to preserve some of their assets, that would have changed the timeline for Tom’s being eligible for care.
Louise needs income to live on so that she is not impoverished. She is entitled to a monthly minimum maintenance needs allowance of $2,058 and a maximum needs allowance of $3,150.50. These numbers are federally adjusted and based on inflation.
The numbers that must be examined for Louise’s income are her Social Security benefits, Tom’s Social Security benefits, any pension either of the two may have, and any other income sources. She can keep her income, as long as she does not go over a certain level.
Sound scary? It is. There are sound legal strategies that will allow a family to qualify for Medicaid by the wise allocation and reallocation of assets.
This is why it is important to do advance planning and have an ongoing relationship with an attorney experienced in estate planning and elder law. There are changes over time to address the changing circumstances that life and aging present. Your options for making good choices is greater when planning well before a spouse needs nursing home care.
Reference: Pittsburgh Post-Gazette (April 29, 2019) “Married and concerned about one of you going to a nursing home?”