MEDICAID FOR MARRIED COUPLES

 

Lisa Nachmias Davis

Davis O'Sullivan & Priest LLC - Attorneys at Law

129 Church Street - Suite 503

New Haven, CT 06510

203-776-4400

davis@sharinglaw.net ~ www.sharinglaw.net

(revised 8-8-16)

 

USE WITH CAUTION.  In almost every case it is essential for a married couple to consult an experienced elder law attorney when Medicaid eligibility seems necessary.  This article is a brief summary of the complex rules that the attorney will apply to ensure that the outcome is the most favorable for the couple. 


Under federal law, when one spouse is residing in a long-term care facility for 30+ days, or requires comparable care at home under a special "home care" Medicaid program, the assets of both spouses are considered available, but the spouse not receiving care -- called the "community" spouse -- is entitled to so-called "spousal impoverishment protections."  These can be used to the advantage of the community spouse, but usually require legal help. The spouse in the nursing home is eligible for Medicaid beginning the first of the month by the end of which the combined, non-exempt assets of both spouses are reduced to permitted levels -- $1,600 (net that month's income) plus the "CSPA" described below. Values are determined using bank records, not your checkbook.

(BIG EXCEPTION:  if one person resides in a nursing home and the other is at home, AND the person in the nursing home does not receive Medicare, is age 19-65, and has taxable income under 138% of poverty, "Husky D" (low income adult Medicaid) covers and this article NEED NOT APPLY.  However, income has to be paid to the nursing home.)

 

1.    Exempt Assets.  If occupied by the "community spouse," the home is protected, no matter its value.  No lien is placed on the home.  (AFTER the spouse in the nursing home qualifies for Medicaid, the community spouse may sell the home and use the proceeds for whatever (s)he wants, so it is a good idea to transfer title into the name of the community spouse.)  Even if the spouse receiving care dies and his/her name is on the deed, the State will not take the home.  Also, one car of any value is allowed when there is a community spouse.  These are the big two, but there are other "exempt assets" -- click for my article on this.

 

2.    Assets of BOTH SPOUSES Count.  Putting assets into the name of one spouse does not mean the other spouse qualifies for Medicaid.  The State wants to know about the assets of EITHER or BOTH spouses.  This means that the community spouse MUST provide information about his/her assets and all transactions for the prior 5 years.  This can create headaches when couples are separated or don't share financial information. (For federal purposes, there is only "married" and "divorced" - nothing in between.)

 

3.   Transfers BETWEEN Spouse are No Problem But Don't Help Eligibility.  Because assets of both spouses count, gifts between spouses create no problems  (at least up until a reasonable time after the ill spouse qualifies for Medicaid) but don't help Medicaid eligibility.

 

4.   Minimum Monthly Needs Allowance ("MMNA").  Federal law sets up a formula that computes what the community spouse "needs" to live without poverty. In 2015, this "need" is capped at $2,980.50/month (set annually), and could be less.  Only certain actual expenses are factored in -- mortgage, taxes, condo payment, rent, insurance.    (The state also uses a flat figure for utility expenses.)  (If this isn't enough, it may be possible to get a probate court to order more, and if so the state must accept that, but this is tricky and requires advance planning -- consult an attorney.)  If the income of the community spouse is not enough for his or her "MMNA," income of the other spouse -- known as the "institutionalized spouse" -- can be given to the "community spouse" rather than paid to the nursing home as applied income, which otherwise would be required (see article on applied income).  This is called a Community Spouse Allowance.  If this still isn't enough, it's possible to go to an administrative hearing and ask the State to allow the community spouse to keep more of the couple's savings so as to generate investment income to bring the community spouse's income up to this MMNA.  Note: if the community spouse actually has more income, in most cases, (s)he can keep all of it.  The law may allow the State to check whether the spouse, a "legally liable relative," might have to chip in modestly to the cost of the other spouse's care, but in Connecticut, this is (a) rare and (b) legally disputed.

 

5.   Community Spouse Resource Allowance a/k/a Community Spouse Protected Amount or "CSPA". Federal law sets up a mechanism to divide up a couple's assets into an amount that is "protected" for the community spouse and does not have to be spent before the other spouse qualifies for Medicaid, and the amount that is not protected, and must be reduced to $1,600.  In Connecticut, effective January 1, 2015, the protected amount is the LESSER of $119,220* or one-half of the couple's combined assets computed "as of the first day of a continuous 30-day period of institutionalization" (meaning, hospital OR nursing home care or sometimes, long-term care services at home, but this gets tricky).  This "one-half" rule means it is important NOT TO SPEND ASSETS TOO SOON if Medicaid is likely in the future.  Half of something big is more than half of something small!  As discussed in #4, if the couple's income isn't enough to be sure that the community spouse has enough for his/her "MMNA," it is quite possible to keep a lot more money, but only after going through an administrative hearing.  Factors include not only the expenses listed in #4 but the prevailing interest rates at the time of the hearing.  In any event, when the couple's assets are more than the protected amount plus $1,600, the excess assets have to be "spent down" or reduced -- not necessarily by paying for care. NOTE:  the CSPA  will always be AT LEAST $23,884*, so if you both started out with $50,000 you would not have to spend half, but would only have to spend the spouse's half down to $23,884.  Practically speaking this would mean that between you you could have a minimum of $25,484 ($23,884+$1,600 = $25,484).

 

6.    Annuitizing an IRA.  If the assets include an IRA owned by the community spouse, the asset can be reduced -- eliminated -- by converting it to a stream of income.  This means that the money can no longer be taken out in a lump sum but only as a stream of income over the years.  Also, the State MUST be named as a beneficiary to get repaid for the care provided to the institutionalized spouse out of any payments that remain when the community spouse dies, up to the amount of Medicaid received. 

7.    Buying a Medicaid-Compliant Annuity.  Thanks to a new case called Lopes, the community spouse can "spend down" excess assets by purchasing an annuity that meets certain criteria (is irrevocable, non-assignable, no cash value; if bought with the other spouse's assets, has a term no longer than life expectancy) and that names the State as beneficiary to get repaid on the spouse's death for care provided to the institutionalized spouse out of any payments that remain when the community spouse dies.  TREAD CAREFULLY.  The company may not understand the requirements; buying something with a payback clause may not be the best option.

 

8.    Post-Eligibility.  In general, AFTER the institutionalized spouse qualifies for Medicaid, the community spouse can do what he/she wants with assets and income.  Exception:  (s)he cannot GIVE AWAY the house or the proceeds of a reverse mortgage or home equity loan, without causing the institutionalized spouse to lose eligibility.  The house could, however, be sold, and the proceeds disposed of!  (Of course, any gift may affect the future Medicaid eligibility of the community spouse.)  There is no lien on the house or assets of the community spouse and when (s)he dies, in most cases, no claim of reimbursement against the community spouse's estate for the costs of the other spouse's care.  (Certain exceptions may apply.)  The community spouse may wish to change his/her will so that only the statutory minimum -- the right to income on 1/3 of the estate -- is left to the institutionalized spouse.

 

9.   Obligations.  If the income of the institutionalized spouse is not necessary to be paid over to the community spouse so (s)he can meet the MMNA (or if not actually paid over), it must go to the nursing home as "applied income" for every month or partial month during which the institutionalized spouse receives Medicaid.  Failure to pay applied income may result in liability to the nursing home, and the nursing home -- unlike the State -- can sue, put a lien on the house, etc.  Also:  a "recertification" form must be filed for the institutionalized spouse, usually every 6 months or every year after qualification.    Also -- certain debts don't go away just because the other spouse's income is going to the nursing home. The community spouse may be stuck with tax bills or other debt payments that were previously paid out of two incomes.
 

  

*Figures change annually.


Note:
  This information on CONNECTICUT law is maintained to benefit the elderly in Connecticut and nationwide by providing a resource to attorneys, caregivers, and others assisting the elderly.  However, accuracy and currency are not guaranteed.  The law changes often; this may be out of date.

USE AT YOUR OWN RISK. Please report changes, errors, and suggestions to Lisa Davis.

 

Lisa Nachmias Davis

Davis O'Sullivan & Priest LLC - Attorneys at Law

129 Church Street - Suite 805

New Haven, CT 06510 ~ 203-776-4400

davis@sharinglaw.net ~ www.sharinglaw.net