Asset Protection & Medicaid Eligibility: Part 1, Married Couples
By Kelli Y. Allen, Elder Law Attorney
Many seniors facing the need for long-term, skilled nursing care are especially concerned about the financial security of the healthy spouse. People fear that all of the couple’s assets will have to be used to pay for nursing care, that the healthy spouse will be unable to meet his or her other financial obligations, and that the family home will be lost. Fortunately, with proper planning and preparation, this need not be the case. Usually, it is possible to protect most, if not all, of the couple’s assets and still achieve Medicaid eligibility.
Financial Eligibility – Spouse Needing Care
To qualify for long-term care Medicaid for a skilled nursing facility, the spouse needing care must have no more than $2000 in countable assets in his/her name. The Medicaid regulations allow an individual to transfer assets to a spouse without penalty. Therefore, all the assets can be immediately transferred into the name of the healthy spouse to satisfy this requirement, thereby meeting the $2000 cap.
The income of the spouse needing care must be less than the cost of care of the skilled nursing facility in which he or she will be residing. Since this cost is typically $6000 to $10,000 per month, individuals rarely have difficulty meeting the income requirement. Once approved for Medicaid, the majority of the ill spouse’s income is used to pay the nursing facility and Medicaid pays the remainder of the cost.
Financial Eligibility – Healthy Spouse
The healthy spouse, also referred to as the community spouse, must also meet Medicaid financial guidelines. The community spouse resource allowance (CSRA) is the amount of total countable assets the healthy spouse is allowed to keep. In North Carolina, this amount is one-half of the total assets or $120,900, whichever is less.
The income of the community spouse is not considered. Therefore, the community spouse can have unlimited monthly income and it will not impact the Medicaid case. The difference in treatment of assets versus income is what allows the couple to protect most assets and still qualify for Medicaid. By converting excess assets into income for the community spouse, it is possible for the ill spouse to qualify for Medicaid quickly, without transfer penalties. Over a set period of time, the healthy spouse receives a set monthly income stream from a Medicaid compliant annuity or promissory note. As a result, at the end of the payment term, the healthy spouse has reacquired the full value of excess assets that, otherwise, would have been required to be used to pay for long-term care.
Protecting the Home
The primary residence of the Medicaid applicant and spouse is exempt from Medicaid, up to the value of $560,000. Therefore, the home can remain in both spouses’ names and the ill spouse still qualify for Medicaid. However, in this scenario, the home would be subject to estate recovery, whereby Medicaid could attach a lien and recover the expenses paid on behalf of the ill spouse. This can be prevented by transferring the home into just the name of the healthy spouse prior to applying for Medicaid, thereby permanently protecting the home.
This article addresses general guidelines. However, there are many intricacies involved with asset protection and long-term care Medicaid eligibility. It is crucial to consult with an elder law attorney prior to making any transfers or filing a Medicaid application. Only after obtaining detailed financial information can a specific asset protection plan be formulated. Please contact us at 704-727-4900 to schedule a complimentary meet-and-greet to discuss how Kelli Y. Allen Elder Law may be able to assist with your long-term care planning goals.
