When a spouse requires long term care, and resources aren’t unlimited, it is important for the healthy spouse to immediately take steps to (a) qualify the nursing home spouse for Medicaid eligibility, and (b) to engage in immediate Medicaid planning in order to assign some or even all of the couple’s assets to the community spouse’s side of the ledger in order to preserve funds for living for the healthy spouse.
If your spouse has displayed a need for care, the planning can not start too soon. The first thing to remember is that there are many Medicaid programs in place to ensure that spousal impoverishment does not occur because of the need for long term care for a married individual. Medicaid eligibility can be achieved while the non applicant spouse or the “Community Spouse” is provided a spousal share (called the Community Spouse Resource Allowance) retains a significant portion of some, most or even all of the family’s assets, shielding them from use on the Institutionalized Spouse’s care.
When a spouse needs care, the first thing to do is to familiarize yourself with these rules, and to retain expert guidance to direct the process. Quality Medicaid Care regularly assists families with these types of issues. Elder law attorneys handle these types of issues as well, as estate planning may need to be adjusted. The first thing to address is the filing of a Division of Assets, or an Assessment of Assets. When a Division is filed the Medicaid office will make an assessment of all of the couple’s countable assets (and exempt assets such as the primary residence) and will assign to the Community Spouse his or her Community Spouse Resource Allowance, or CSRA.
Under a Division of Assets, the state will determine the countable assets held by the couple (bank accounts, investments, annuities, mutual funds, real property outside of the primary residence). From that, the Medicaid office will determine the CSRA, which will equal one half of the countable assets, with a maximum CSRA of an approximately $160,000 (currently) asset limit. This CSRA will protect assets from spend down on payment for the applicant spouses nursing home level of care. Additionally, 100% of the value of the primary residence is assigned to the Community Spouse as part of the CSRA, with no estate recovery or the estate recovery program after death.
The remaining countable assets are subject to spend down. However, there are many steps that can be taken to protect assets provisionally subject to spend down. For example, if there is a mortgage on the primary residence, these countable funds can be used to reduce the mortgage, thus increasing the equity in an asset held by the CSRA. Debt can be extinguished. Additionally, a Medicaid Compliant Annuity can be purchased.
One important thing to note is that these remaining countable assets cannot be gifted. Asset transfers for under fair market value, even under a Division of Assets, are subject to a penalty period (a period of ineligibility) if made within the five year look back period (the look back rule, determining Medicaid ineligibility).
Finally, it is important to note that Divisions of Assets are not allowed to be filed if a person is entering assisted living, or assisted living services. Divisions only apply to long term care provided to a fully Institutionalized Spouse with a full compromise of activities of daily living (adls).
Once the remaining assets have been spent or protected, the Institutionalized Spouse will be eligible for Medicaid assistance. At that time, there are more steps available to protect the Community Spouse. Initially, the Institutionalized Spouse’s income goes to facility (called the Money Follows the Person Rule), However, a calculation will be made to determine if the Community Spouse has enough monthly income to live on on a month to month basis for spousal protections. If the Community Spouse’s income is not high enough to reach this lower income limit, then the Community Spouse will be assigned as much of the Institutionalized Spouse’s income to reach this necessary amount. This calculation is referred to as the Minimum Monthly Maintenance Needs Allowance (or the MMMNA). Additionally, the Institutionalized Spouse will receive a reduction of his or payment of income to the nursing for their own monthly personal needs allowance.
These rules also apply for home and community based services (HCBS) in the home. An HCBS waiver allows a spouse to remain in the home while receiving in home care and/or medical assistance while receiving Medicaid assistance. Often times a qualified income trust (or Miller Trust) is required but the concepts for planning and application are exactly the same.
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