How to Plan for Spouse’s Medicaid

How to Plan for Spouse’s Medicaid

Medicaid eligibility, assuming that you require long term care and have satisfied the medical eligibility requirements , is essentially a two-prong test or analysis of assets and income.   That is, there are restrictions on the types of resources that you can have when you apply for Medicaid, specifically with regard to assets, if you expect to be approved for benefits.    The income portion of the analysis is most relevant where there is a spouse who will continue to live in the community and will need a portion of the applicant’s income to maintain his or her standard of living.    There are other considerations with regard to income, such as the Patient Paid Amount and where an applicant may have substantial income to create what is called an “under/over issue”; however,  assets are the initial consideration in the overall analysis.

The Times Herald’s recent article entitled “Medicaid planning for a spouse” says that one of the toughest requirements for Medicaid to grasp is the financial eligibility. These rules for the cost of long-term care are tricky, especially when the Medicaid applicant is married.

To be eligible for Medicaid for long-term care in Massachusetts, an applicant generally cannot have more than $2,000 in countable assets in their name.

However, federal law says that certain protections are designed to prevent a spouse from becoming impoverished when their spouse goes into a nursing home and applies for Medicaid. In 2021, the spouse of a Medicaid recipient living in a nursing home—known as “the community spouse”—can keep up to $128, 640 (which is the maximum Community Spouse Resource Allowance “CSRA”) and a minimum of $25,728 (the minimum CSRA) without placing the Medicaid eligibility of the spouse who is receiving long-term care in jeopardy.

The calculation to determine the amount of the CSRA, the countable assets of both the community spouse and the spouse in the nursing home are totaled on the date of the nursing home admission. That is known as the “snapshot” date. The community spouse is entitled to retain 50% of the couple’s total countable assets up to a max. The rest must be “spent-down” to qualify for the program.   So, for 2021 to qualify for Medicaid in Massachusetts (which is called MassHealth), a married couple can keep a total of $130,640 in countable assets.

So what are countable assets?  In Massachusetts, cash, bank accounts, IRA’s and other retirement accounts, brokerage accounts, life insurance policies, annuities, a boat, a second or vacation home, and a second vehicle are all countable.  The couple’s primary residence, with a maximum equity limit of $893,000, and one vehicle is exempt.  That is, the home’s value and the one vehicle are not factored into whether a MassHealth applicant is eligible.

With regard to the “spend down”, there are many strategies and options that can be utilized, but they are dependent upon the types of assets that the couple have and how these assets are owned, that is, jointly or individually.    There are more strategies available for a married applicant (versus a single or widowed applicant).  Despite having an over-resourced applicant who is therefore not “otherwise eligible”, these spend down strategies can be implemented to either shorten a period of ineligibility where the couple pay at the private pay rate of approximately $17,000 per month in Massachusetts or achieve eligibility at the time of application.

In addition to the CSRA and the asset rules for Medicaid qualification, there are also federal rules concerning income for the spouse. In many states, the community spouse can keep all of his or her own income no matter how much it is.   If the community spouse’s income is less than the amount set by the state as the minimum needed to live on (“the Minimum Monthly Maintenance Needs Allowance” or “MMMNA”), then some of the applicant spouse’s income can also be allocated to the community spouse to make up the difference (called “the Spousal Allowance”). These rules are very  complex, so speak with an experienced elder law attorney.

Reference: The Times Herald (Jan. 8, 2021) “Medicaid planning for a spouse”