The cost of care in a nursing home can quickly devastate the finances of a married couple. When I first began to practice elder law, the situation was dire. A married couple could spend all of their savings paying for the care of the person who was institutionalized. The spouse at home would then have to try to live the rest of his or her life with no savings and limited income.
In recognition of this problems Congress passed a law in 1988 which was intended to limit the “spousal impoverishment” that can result when one spouse becomes a nursing home resident.
Under this Medicaid law, minimum amounts of financial resources and income are protected for a spouse who is still living in the community. These protected amounts are adjusted each year to account for inflation. The adjustments are based on a Labor Department measure of inflation.
The Federal Government Centers for Medicare and Medicaid Services has released the spousal resource and income protection allowances that will apply during 2019.
How do the Community Spouse Resource and Income Allowances Work?
In general, when your spouse is in a nursing home or needs assistance with home care under a Medicaid Waiver program (like Pennsylvania’s Aging Waiver program) he or she will not qualify for Medicaid benefits until your combined financial resources are reduced to a certain level. That permitted level of so-called “available resources” varies depending on your financial circumstances.
Where one spouse is in a nursing facility the general rule is that the community spouse can keep ½ of the amount of available resources that were owned by the couple on the date of admission to the nursing facility. However, this standard protected “Community Spouse Resource Allowance” is subject to a ceiling and a floor. The ceiling and floor amounts for 2019 are set out below. Note that a couple may also be allowed to retain certain assets that are treated as being exempt. This can include the couple’s residence up to a certain equity value.
In addition to being allowed to keep the resource allowance, the community spouse is also entitled to have a certain level of income called the Monthly Maintenance Needs Allowance. This income allowance is also subject to a ceiling and a floor. If the community spouse does not have the required level of income, that spouse may be allowed to keep some of the institutional spouse’s income. If the income diverted from the institutionalized spouse is still insufficient, the community spouse may be able to keep additional resources.
What are the Resource and Income Allowances for 2019?
In 1988, the Medicaid law established the initial community spouse resource allowance at levels of $12,000 minimum and $60,000 maximum for 1989 based on the CPI-U for September 1988. The initial maximum income allowance was set at $1,500. The law provides that these levels be increased by the same percentage as the percentage increase in the CPI-U between September 1988 and the September before the calendar year involved.
The 2019 Allowances
The spousal protection allowance figures for 2019 are as follows:
Minimum Community Spouse Resource Allowance for 2019 = $25,284
Maximum Community Spouse Resource Allowance for 2019 = $126,420
Maximum Community Spouse Monthly Income Allowance for 2019 = $3,160.50. (Note: The Minimum Monthly Maintenance Allowance remains at $2,057.50 – it will be adjusted on July 1, 2019. The income allowances are higher for residents of Hawaii and Alaska.)
In Pennsylvania the exempt home equity allowance for 2019 is $585,000. It is higher in some other states.
Readers should understand that the Community Spouse Resource Allowance is a starting point for planning. A community spouse can typically protect resources far in excess of his or her resource allowance through Medicaid planning techniques such as the purchase of a Medicaid qualified annuity. (Be sure to consult an experienced elder law attorney before purchasing an annuity for purposes of qualification for Medicaid benefits.)
If you live in Pennsylvania, are married, and your spouse needs long-term care at home or in a nursing home, you can call Marshall, Parker and Weber for help in protecting your financial security. Call 1-800-401-4552.