Despite the intent of the law, allowing one spouse to remain in the family home and have enough income to live on when the other spouse needs Medicaid to pay for nursing home care does not happen automatically. According to the article “What a ‘Community’ spouse can keep” from The Bristol Press, protecting the community spouse is necessary if they are to maintain their prior standard of living.
The community spouse is entitled to a minimum monthly maintenance needs allowance (MMNA), which changes yearly. If the MMNA is $2,288.00, and the healthy spouse has an income of $1,000.00, Medicaid allows a diversion of the sick spouse’s income of the difference, or $1,288.00 per month, to the healthy spouse. In most situations, this is not enough to maintain a home, pay bills and enjoy a well-deserved retirement.
An elder law lawyer can help protect assets for the community spouse. The family home is exempt if it is in the name of the healthy spouse, although most states have a limit to the allowed value. If the sick spouse is approved for Medicaid, the healthy spouse may choose to sell the home and keep the proceeds or downsize to a smaller home.
The community spouse may keep up to $137,400.00 in investment assets in 2022. That’s considered half of the couple’s total “countable” assets. If the couple’s investment exceeds this amount, a number of strategies are used to protect the life savings, as long as they stay within the “spend down” rules. The healthy spouse may spend on house expenses or improvements. A new car could replace an old model.
Another method is a Single Premium Immediate Annuity, sometimes called a Medicaid Annuity Trust. The well-spouse can purchase this and protect their life savings. However, if the well spouse dies before the sick spouse, the balance of the annuity will need to be paid to Medicaid to reimburse it for expenses paid for the care of the ill spouse.
One positive note: the personal property is not considered a countable asset. Home furnishings, decorations, jewelry, etc., and any personal property will not be counted. Embarking on a spending spree to resell personal property to raise cash is not a good idea since few items maintain their value after the initial purchase.
Planning should be done in advance when both spouses are well because Medicaid strictly enforces the five-year look-back rule. Any assets transferred within five years of a Medicaid application will make the sick spouse ineligible for Medicaid coverage, and healthcare expenses will have to be paid out of pocket.
Reference: The Bristol Press (July 29, 2022) “What a ‘Community’ spouse can keep.”