MEDICAID FOR
MARRIED
COUPLES
When your
opposite-sex spouse needs long-term care
Lisa Nachmias
Davis
Davis
O'Sullivan & Priest LLC - Attorneys at Law
davis@sharinglaw.net
~ www.sharinglaw.net
(revised
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. Currently,
these protections are only
available to opposite-sex couples - -the federal "Defense of Marriage
Act" ("DOMA") states that under federal law, a couple is
"married" only if members of the opposite sex. Medicaid is a federal
law, although administered differently in different states. This may change as DOMA is challenged in the
courts. On the other hand, these
so-called "protections" are sometimes anything but -- and that can be
helpful to a same-sex couple facing long-term care expenses.
1.
Exempt Assets. If
occupied by the "community
spouse," the home is protected, no matter its value.
No lien is placed on the home. The
community spouse may sell the home and
use the proceeds for whatever (s)he wants,
AFTER the
other spouse qualifies for Medicaid. 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 where there is a community spouse.
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 spouse.
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 to Spouse
are Protected. On the other
hand -- there
is no harm done by doing this as gifts between spouses are exempt (at
least up
until a reasonable time after the ill spouse qualifies for Medicaid).
4. Minimum Monthly Needs Allowance ("MMNA"). Federal law sets up a formula that computes what the community spouse "needs" to live without poverty. In general, this is capped at $2,739/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 the income of the community spouse is not enough for his or her "MMNA," the income of the other spouse -- known as the "institutionalized spouse" -- that is considered available can be given to the "community spouse." 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 keep more of your 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, (s)he can keep all of it. The law does 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 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; a certain amount is
"protected" for the community spouse and this does not have to be
spent before the other spouse qualifies for Medicaid.
Effective July 1, 2011, the amount is the LESSER of $109,560* or
one-half of the combined assets "as of the first day of a continuous
30-day period of institutinalization" (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. However, 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.
6.
Annuitizing an IRA. The law
has loosened up on the treatment of
IRAs or other "qualified" funds (before-tax contributions to
retirement plans). If the IRA belongs to
the community spouse, (s)he can "annuitize
it" - - so the money cannot be taken out in a lump sum but is just paid
out as a stream of income over the years -- provided the State is 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. It is possible, but tricky and controversial,
to do this with a private annuity that one just goes out to buy, known
as an
"immediate annuity." This is an evolving area.
7.
Post-Eligibility. In
general, the community spouse can do
what he/she wants with assets and income after the institutionalized
spouse
qualifies for Medicaid. 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.)
8.
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." 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 is maintained to benefit the elderly in
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