Just the Basics Series

Part 4: Long-term Care Planning for Married Couples

True or false: If your spouse is in a nursing home, it’s too late to protect anything. This is a question taken from a handout I like to use for my Eggs & Education presentations. Often, people fall into the trap of believing that this statement is true.

The answer is false. It is not too late to protect assets when one spouse is already in the nursing home. In fact, there are Medical Assistance rules that favor the spouse who does not need nursing home care.

The spouse that does not need nursing home care is called the “community spouse.” The community spouse is able to enjoy all of the ordinary exemptions that a single individual would if they were applying for Medical Assistance. The most notable assets[i] that are considered to be exempt are the primary residence, one vehicle, and personal property.

There are two special rules that serve to protect the community spouse as well. The first is that the community spouse’s retirement accounts are considered exempt and therefore not countable assets. In other words, the community spouse can keep their own retirement accounts and the amount of the retirement accounts has no bearing on how much of the countable assets they can keep.

The second rule allows the community spouse to keep a certain amount of the assets that are countable, or “available” to pay for the care of the spouse in the nursing home. This is called the community spouse resource allowance. In general, the community spouse can keep half (50%) of the countable assets. The amount that the community spouse can keep has a floor and a cap, however. The floor in 2014 is $23,448. This means that the community spouse of a couple whose countable assets are less than $46,896 will be able to keep $23,448 regardless of the fact that this is more than half of the countable assets. On the flip side, the maximum, or cap, is set at $117,240. This means that this is the maximum that a community spouse can keep as their resource allowance.

The spouse who needs nursing home care is also allowed to keep a share of the couple’s countable assets. The amount that they are allowed to keep is either $2,400 or $8,000 depending on their monthly income. Often times, I believe this is where people get confused about the financial qualification for Medical Assistance. Clients ask me quite frequently how they will ever qualify for Medical Assistance since they need to “spend down” to $2,400 or $8,000. As you can see, though, because of the community spouse resource allowance a married couple can usually keep much more than $2,400 or $8,000.

What if the couple still has too much in available assets to qualify? What happens to the assets not protected by the community spouse resource allowance?

Each case is different. There is no one size fits all planning option. Often, there are techniques that elder law attorneys can use to help protect these assets as well. In some cases, special annuities may be used to convert countable assets to income for the community spouse, thereby reducing the couple’s resources to a level where the spouse in the nursing home will qualify for Medical Assistance. You can read more about the use of annuities in long-term care planning by reading other articles on the topic by Attorney Parker here and Attorney Marshall here.

There are two important take-away points to this article that I want to stress. First, it’s not too late to protect assets if your spouse has already entered the nursing home. There are rules available to help people who are in this position, but you need to know how to apply them. Second, this is not the time to try to do it yourself. If you find yourself in this position, schedule an appointment with an elder law attorney to review your options and see what planning is available and appropriate in your situation. The Medical Assistance rules are complex and constantly changing. Elder law attorneys are your resource to lean on in these circumstances.