Before we address the Medicaid spousal impoverishment rules, we have to provide some background information.
The majority of senior citizens will need help with their activities of daily living, and over one-third of elders will ultimately reside in nursing homes. This is an eye-opening fact of life that many people never consider.
Most seniors get health insurance through Medicare, and it provides a strong underpinning. There are out-of-pocket costs, including monthly premiums, deductibles, and copayments, but they are manageable for the most part.
However, there is one out-of-pocket expense that is anything but manageable for the majority of elders. Medicare does not pay for nursing home care, and this is a significant gap because you can expect to pay about $180,000 for a year in a private room in a quality nursing facility in our area.
The Medicaid Solution
Medicaid does pay for long-term care, and this is why it is relevant to seniors who qualify for Medicare. Since it is a need-based program, there is an asset limit of $1,600, but some assets are not counted.
A home is not a countable asset, but there is an equity limit of $1.033 million in 2023. Except for the asset limit, all the figures that we are going to share here are updated annually to account for inflation.
One motor vehicle that is used as a primary source of transportation is not counted, and wedding rings, engagement rings, and heirloom jewelry are exempt. Your furniture and the other items that you have around the house are not counted, and personal effects are exempt as well.
Prepaid burial plots are okay, and you can have $1,500 or less set aside for final expenses. The same amount of whole life insurance is allowed along with unlimited term life.
Allowances for the Healthy Spouse
In Medicaid lingo, the healthy spouse that can still live independently is referred to as the “community spouse.” The independent spouse is entitled to a Community Spouse Resource Allowance. This is equal to half of the assets that are countable, but there is a limit.
The limit is $148,620 in Connecticut this year, and there is a minimum allowance of $50,000. This is the lowest amount a healthy spouse can keep even if it is more than half of the countable assets.
Almost all the income that is brought in by an institutionalized spouse must go toward the cost of the care that is being received unless a healthy spouse is relying on the income.
Under those circumstances, the independent spouse would qualify for a Monthly Maintenance Needs Allowance. The limit on this allowance in our state is $3,715.50, and the minimum is $2,465.
We stated that there is an equity limit that applies to home ownership. When a healthy spouse is remaining in the home, there is no equity limit at all.
Spending Down to Qualify for Medicaid
Elder law attorneys advise people that want to divest assets so they can qualify for Medicaid. If you fund an irrevocable Medicaid trust, the assets would no longer be in your name in a legal sense, and they would not count if you applied for Medicaid.
You would however be able to continue to receive income that is generated by assets in the trust until and unless you apply for coverage.
This can seem like a simple solution, but timing is important, because there is a five-year look-back period. The trust must be funded at least five years before you apply for Medicaid.
Attend a Complimentary Seminar!
We go the extra mile to provide educational opportunities to members of our community through the seminars that we hold on an ongoing basis. There is no admission charge, and you will come away with a great deal of useful information if you join us for one of the sessions.
You can head over to our Estate Planning Seminars Page to see the dates and obtain more information.
Need Help Now?
If you are ready to work with a Glastonbury or Westport, CT estate planning lawyer to put a plan in place, call us at 860-548-1000 to schedule a consultation appointment, and you can use our contact form to send us a message.
Mr. McCann is licensed to practice before the courts of the State of Connecticut. He is a member of the American Academy of Estate Planning Attorneys.
Mr. McCann provides to his clients, trust and estate planning, and trust and estate administration services. Formerly, Mr. McCann was an adjunct professor of economics in the State of Connecticut Community College system, and a Commissioner of the Town of Simsbury Zoning Board of Appeals.