Medicaid Planning for Long-Term Care - Part 2 - Protecting the Spouse
It is rare for both spouses to need long-term care. Typically, one spouse enters a long-term care facility while the other continues to live at home. In Medicaid terms, the spouse who enters a long-term care facility is called the “institutionalized spouse” while the spouse who remains at home is called the “community spouse.”
The primary concern for the community spouse is having enough assets and income to continue living in the home. Fortunately, there are rules to prevent the community spouse from becoming impoverished.
Resource Allowance and Exempt Resources
For 2016, the community spouse can have a maximum of $119,220.00 in “countable assets.” As the term “countable assets” implies, certain assets are not countable or “exempt.” The most important of these assets would be the home used as the primary residence for the community spouse provided that the value of the home does not exceed $552,000.00. There is no limit on the dollar value of a car titled to the community spouse and no limit on the value of the community spouse’s personal property and household effects.
The institutionalized spouse can have a maximum of $2,000.00 in countable assets in his her or name. Medicaid does require for the assets to actually be divided so that $119,220.00 is only in the name of the community spouse and $2,000.00 is in the name of the institutionalized spouse. However, as a practical matter, re-titling of the assets does not need to be completed before the application is approved.
Even with Medicaid, the institutionalized spouse must contribute nearly all of his income towards the costs of the long-term care facility, and Medicaid then makes up the difference. This means that the community spouse will lose that source of income. However, the community spouse is allowed a Minimum Monthly Maintenance Needs Allowance or “MMMNA” of $1,992.00 per month. (This is the basic level. In exceptional cases this amount can be increased up to a maximum of $2,981.00 per month.) This means that if the community spouse’s income is less than $1,992.00 per month, she will be allowed to receive a portion of the institutionalized spouse’s income that will bring his or her monthly income to the $1,992.00 level. If the community spouse’s income exceeds the MMMNA, there is no “penalty,” and her income will be hers to keep. The community spouse will not be required to use any of her income to help pay for the institutionalized spouse’s cost of care.
The Medicaid rules allow and actually favor ensuring that the community spouse has sufficient resources and income not to become impoverished herself. If countable assets exceed $119,220.00, the community spouse has several options to spend this money down to the required level. These options include improving an existing home that is badly in need of repairs, purchasing new home, and purchasing a new car. The community spouse can also purchase an annuity that complies with Medicaid regulations to provide her with additional income. However, these rules can become a bit involved, especially when it comes to annuities and retirement accounts. Failure to comply with the rules could result in a denial of benefits.
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