Having to go to or to place a loved one in a nursing care facility can be extremely frustrating and frightening. The process is never as easy as it should be; it is emotionally challenging, extremely expensive, and worrisome, especially for a healthy spouse. For so many Americans, the thought of having to give up all of their assets to pay for long term nursing home care is unbearable, especially if their spouse still wants and needs to live at home. Is there a way to protect your assets? Let’s take a look.
In general, unless you have purchased a private long-term care insurance policy, a person may be forced to deplete their assets in order for Medicaid to kick in and cover the ongoing charges. Medicaid is a jointly funded federal and state program that provides medical benefits to people with limited assets. In order to qualify for Medicaid, a person has to fall below the established asset minimums set by the state. So long as your assets fall below the threshold, Medicaid will pay for your nursing home care. However, what happens when the individual requiring Medicaid has a healthy spouse? Does that spouse have to give up everything in order to have Medicaid pay for their spouse who needs care?
Mandatory Spend Down
At one time, the Medicaid threshold and asset maximums did not take into account the needs of a healthy spouse and both individuals were forced to deplete their assets in order to qualify for Medicaid. This process of depleting your assets to qualify for Medicaid is called “spending down.” However, Medicaid presently has rules that prevent a healthy spouse from having to give up everything. Specifically, these provisions are referred to as “spousal impoverishment” clauses. Pursuant to the “spousal impoverishment” rules, a healthy spouse can preserve some certain assets or resources even though the other spouse is entering a nursing home.
Resource Assessment & Spousal Impoverishment
If one spouse is going to a nursing home for 30 or more days, the “spousal impoverishment” rules apply, and the couple is entitled to “resource assessment.” This is really just a fancy way of saying that the state will look at the couple’s assets, so it can determine what assets are permitted to be excluded. In order to begin this process, the couple has to complete and submit a form to the state or county listing all of their assets. In general, the primary assets that are excluded are the counsel’s primary residence, household items and personal belongings. In some states, the healthy spouse’s IRA is also protected.
Once the assessment is complete, a “spousal share” will be determined, that is, the amount of assets that the healthy spouse will be allowed to keep. Typically, the “spousal share” is one-half of all the assets listed on the assessment. So, for example, if a couple’s combined assets total $60,000 as listed on the assessment, the healthy spouse would be entitled to keep $30,000 without making the other spouse ineligible for Medicaid. As a side note, the healthy spouse would also keep their primary residence and the other exempt assets, like furniture and personal items.
The good news is that most married couples will qualify for assistance from Medicaid if one spouse needs nursing home care without being forced to “spend down”. The “spousal impoverishment” rules will protect a healthy spouse from being left with no assets or place to live.