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home | Financial Facts | Medicaid Spousal Impoverishment Rule . . .

Medicaid Spousal Impoverishment Rules: Protection From Nursing Home Costs For the Husband or Wife Staying at Home

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One of the greatest fears senior couples have is for nursing home care to take all their available money, leaving the husband or wife who is living at home penniless. Until 1988 this was sometimes the case. Public welfare, or worse, became the lot of some elderly spouses because their husband or wife could no longer be cared for at home. In the last 20 years things have improved some.

Paying for nursing home care can cost upwards of $10,000 a month in some places. According to a recent study released by Genworth Financial Services, the average cost of a semi-private bed in a nursing home is $183.25 per day, or almost $66,900 a year, not including the cost of supplies and medicines. 
It's a rare elderly couple who can afford to pay these rates for very long. 
In 1988 Congress came to its senses and enacted legislation to prevent what they call "spousal impoverishment," which is government talk for sending the husband or wife at home to the poorhouse.
Here's How Medicaid Helps a Couple Preserve Some of Their Assets
Spousal impoverishment provisions come into play when one of a couple enters a nursing home expecting to stay for at least 30 days. At that time the powers that be take a "snapshot," of their combined resources.
All of their assets (cash in the bank, CDs, investments, etc.) are combined on paper. Income, such as Social Security, retirement or interest is another thing entirely, and is not included in these calculations. Separate property doesn't count here, either...everything is combined, no matter whether it's jointly owned or separate property. The home, household goods, one car, and burial funds are backed out. The result is the couple's "combined countable resources."
This number is then split in half. This is the amount used to calculate the "Spousal Share." 
To calculate the spousal share, or the amount the spouse at home (the community spouse) will be permitted to keep while the nursing home spouse receives Medicaid help, the formula subtracts a "Protected Resource Amount" for the at-home spouse from the spouse at home's half:
The Protected Resource Amount is the largest of:
A. A maximum of $109,000 (in 2009); or
B. The individual state standard, which can be any amount between $21,912 and $109,560 in 2009; or
C. An amount transferred to the community spouse for her/his support as directed by a court order; or
D. An amount designated by a state hearing officer to raise the community spouse's protected resources up to the minimum monthly maintenance needs standard.
After the protected resource amount is subtracted from the community spouse's share of their combined countable resources, the balance is considered to be available for the nursing home spouse's care.
If the amount available to the nursing home spouse is less than the state resource limit ($2,000 in most states) then the nursing home spouse will immediately be eligible for Medicaid. If the amount is greater than the limit, the nursing home spouse will have to "spend down" by paying privately for care until that limit is reached.

This is extremely confusing, so here are some examples:
John and Mary have $500,000 in countable combined assets after backing out their non-countable things like the house, the car, etc. John needs nursing home care:


  John Mary
When assets are split, each has: $250,000 $250,000
Mary can keep up to $109,560 as her
"Protected Resource Amount"
The remainder must be transferred from Mary to John  
John receives $140,440 from Mary
+ 140,440
John now has: $ 340,440  
John may keep $2,000

       - 2,000

John must spend on his own care before he qualifies for Medicaid


 However, John and Mary have consulted with an elder law attorney, who has petitioned the court to raise Mary's protected resource amount. Mary relies on investment income, and with her investments not producing what they once did, she needs a greater amount invested to keep her standard of living. The state hearing officer agrees, and Mary's protected resource amount is raised to $200,000. She now must only transfer $50,000 to John. Depending on a couple's circumstances the protected resource amount could be expanded even more.
What about a couple with not so much money available. Spitting that money in half could leave the spouse at home with next to nothing.
Arnold and Jane have $30,000 in countable assets. Jane will enter a nursing home, and Arnold will be remaining at home.

  Jane Arnold
When assets are split, each has: $15,000 $15,000
Arnold's share is less than the
minimum protected resource amount, so
Jane can transfer $6,912 to Arnold:



  $8,088 $21,912
Jane may keep $2,000 -2,000  
Jane must spend on her own care before she qualifies for Medicaid

Again, the amount Arnold may keep could be increased by a judge or a Medicaid hearing officer. 
As these examples show, it is not necessary for the spouse staying at home to be completely impoverished due to paying for nursing home care. However, it also illustrates that unless your seniors have very little savings, it would pay to talk to an elder law attorney before you take anything for granted regarding qualifying for Medicaid. Because the base numbers can often be expanded, you don't want to simply assume that the most your at-home senior can keep is $109,560. A good attorney will more than make back any legal fees with the money he or she can save your stay-at-home parent so he or she has the resources to continue living comfortably and securely.

·  When a Senior Has Too Much Income For Medicaid
·  Your Senior's Net Worth
·  What is "Spending Down" for Medicaid?
·  What Do You Need For a Medicaid Application?