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Medicaid rules under federal government regulations, provide for special measures to avoid spousal impoverishment when one spouse enters long-term care for medical or long-term care purposes. When one spouse enters a nursing home, the community spouse must have financial resources to continue to live comfortably. The centerpiece of a Medicaid plan to prevent spousal impoverishment is a Division of Assets, a filing with the state. These concepts are discussed below.

Divisions of Assets

For married couples, a special specific Medicaid planning tool, a Division of Assets, is provided by state law, as directed by federal law, to avoid spousal impoverishment of the community spouse. A Division of Assets is an application to the Medicaid office to set aside a portion of couple’s assets that do not have to be spent down before the institutionalized spouse receives Medicaid eligibility. The Division of Assets is a vital tool for asset protection: every married couple should file a Division when one spouse enters long-term care.

The CSRA: Allocation of Assets

Without filing a Division, all of BOTH spouse’s non-exempt assets are subject to spend down before the nursing home spouse receives Medicaid eligibility. When a Division of Assets is filed, a portion of the couple’s assets are allocated to the community spouse.

The Division of Assets is filed at the time that the institutionalized spouse enters nursing home care. When this Division is filed, the state will create what is referred to as a Community Spouse Resource Allowance (CSRA), exempting this CSRA from spend down, and giving the Community Spouse a portion of the couple’s assets to continue to live in the community at his or her current standard of living.

Under current Medicaid spousal impoverishment rules the following financial levels apply: The minimum CSRA in 2024 is $30,828, and the maximum is $154,140. The community spouse is always allowed to keep the minimum CSRA. The CSRA can increase, even up to the maximum if they have greater assets than the minimum. Typically, the couple’s assets are split in one-half, with the CSRA limited to the maximum amount of a $154,140 asset limit.

Example: Asset Division

Ralph and Alice were high school sweethearts who lived in St. Louis, Missouri, their entire adult lives. Two weeks ago, Ralph and Alice celebrated their 51st anniversary. Yesterday, Alice, who has Alzheimer’s, wandered away from home. Hours later she was found sitting on a street curb, talking incoherently. She was taken to a hospital and treated for dehydration. Ralph comes to see you after their family doctor tells him he needs to place Alice in nursing home care, and that Medicare pay will run out when she leaves the hospital. He tells you they both grew up during the early 1950s and have always tried to save something every month. Their countable assets, totaling $130,000, not including their primary residence real estate, are as follows:

Savings Account;$15,000
CDs;$45,000
Money Market Account;$30,000
Annuity;$20,000
IRA, LIfe Insurance, Other;$10,000
Checking Bank Accounts;$10,000
Residence (no mortgage);$150,000

Ralph receives an amount of income totaling $1,800 each month; Alice’s check is $1,500 His eyes fill with tears as he says, “At $10,000 cost of care every month, our monthly income is insufficient, and ourentire life savings will be gone in about one year!” What’s more, he’s concerned he won’t be able to pay her monthly nursing home bill because a neighbor told him that nursing home will be entitled to all of their Social Security checks.

There is good news for Ralph and Alice. It’s possible he will get to keep his income and most of their assets… and still have the state Medicaid program pay Alice’s nursing home costs. While the process may take a little while, the end result will be worth it.

To apply for Medicaid, Ralph will go through the Missouri Family Support Division (FSD), with Alice as the Medicaid applicant, and he will be able to keep about 1/2 of their assets (or about $65,000 ($130,000 divided by 2)), plus he will keep the home; the home will not be subject to lien or estate recovery.

Income Allocation

After the CSRA has been allocated to the community spouse, the institutionalized spouse may still have some of the family’s to spend down before Medicaid benefits begin. When eligibility does begin, the Division of Assets provides a further major benefit: a full allocation of the family’s monthly income to the healthy spouse to live on on a monthly basis, referred to as the Minimum Monthly Maintenance Needs Allowance (or the MMMNA). The maximum MMMNA income limit is currently $3,853. If the spouse’s income is insufficient to meet this assigned income limit, the healthy spouse may receive a portion of the income of the spouse living in the nursing facility to allow her to reach her assigned income amount. Additionally, Medicaid law allows a credit and exemption for any health care insurance or Medicare monthly premiums due, as well as small personal needs allowance, as reductions from income due to the nursing home.

Home Care

Divisions of Assets can also be used to preserve assets while the spouse in need receives Medicaid provided home care, called Home Community Based Care Services (Or HCBS). These community-based services and Medicaid benefits can keep a spouse in need in the community while also preserving assets and limiting private pay for such services.

Conclusion

Divisions of Assets are invaluable tools when one spouse in a married couple becomes a nursing home resident. Since simply transferring assets are not an option without triggering the gifting lookback period and causing ineligibility, the Division becomes the principal tool to allow the non-applicant spouse to preserve a sufficient amount of assets and income to live on. At QMC, our professionals have filed hundreds of Divisions of Assets and can help your family too. Sometimes, Divisions can trigger a need for adjustment of existing estate planning documents. If that is the case, we can help you find and retain a qualified elder law attorney to assist you.

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