Medicaid is the only public benefit program that pays for long-term nursing home care. Medicare and private health insurance don’t. But in order for Medicaid to pay you’ve got to be broke. Worse yet, if you’re married, your spouse, referred to as a “community spouse” must also be broke – almost. Spouses may keep a modest “Community Spouse Resource Allowance”. In 2023, the maximum “CSRA” in Pennsylvania and most states is $148, 620. But the amount can be much lower. Some notable safe harbors do exist, however. The principal residence, within specified limits, and the IRA, 401(k) or other qualified retirement plan of the “community spouse” remain untouched.
What about Income?
Fortunately, the news is better as regards a spouse’s income. Not only does the income remain untouched, but it can sometimes be increased, provided it is below a specified minimum and also depending upon the spouse’s “shelter costs”. The rules are quite complicated and sometimes allow for an administratively determined increase that exceeds the stated maximum. That maximum spousal monthly maintenance needs allowance, in Pennsylvania, is $2,289.
But in the grand scheme of things, spouses cannot take too much solace. Their increased income, assuming they qualify, comes from that of the institutionalized spouse. Nursing home residents, as a condition of receiving Medicaid benefits, must, with certain exceptions, first pay over their income to the facility. The government makes up the difference. Consequently, the “community spouse” not only has fewer assets, but almost always suffers a sharp cut in household income.
Planning Opportunities
The severe financial consequences that befall the spouse of a nursing home resident can be substantially offset with proper planning. For example, in many cases, excess at-risk assets, instead of being paid over to the nursing home, can be protected for the community spouse via use of a Medicaid-compliant single premium immediate annuity. This measure converts non-exempt countable assets into an exempt income stream payable to the community spouse and generally achieves immediate Medicaid eligibility for the institutionalized spouse. Be mindful that Medicaid planning requires specialized knowledge and experience. Very few estate planning attorneys have the requisite expertise.
The lawyers at Vasiliadis Pappas have helped many community spouses avoid impoverishment over the years. If your loved one or someone else you know is in a nursing home and is spending themselves broke, call us. We can help.