You’ve been married to your spouse for decades. Lately, you’ve noticed that they are losing the ability to look after themselves. You realize that they may soon need nursing home care. You know this requires a lot of planning. Are you prepared?
When a spouse needs nursing home care, most people find that they are ill-prepared for the expenses associated with it. Paying out-of-pocket is expensive. After all, you’ve worked a lifetime to purchase your home and build your nest egg you should be able to pass those down to your children and grandchildren…not lose them to the nursing home. Your other options are to apply for Medicaid, or use long-term care insurance. Sadly, long-term care insurance is often overlooked until it’s too late to get it, leaving Medicaid as the only option. However, Medicaid eligibility can be tricky, and most people wonder how their assets might be impacted.
What Happens to My Income?
If your spouse has to go to a nursing home, all of their income will go to the nursing home. You can keep all of your income but in many cases that is not going to be enough. Without proper long-term care planning and a loss of your spouse’s income, your life savings could be drained in a matter of months if you have to pay out-of-pocket. Becoming eligible for Medicaid is challenging, with inhibitive income and asset limitations that may leave your spouse unqualified to receive these benefits. As the spouse who is not going to apply for Medicaid (also known as a “community spouse”), your income will not be factored in to eligibility. However, your spouse’s monthly income (which cannot exceed ~$2,523 per month ) will be used to determine Medicaid eligibility, and to pay for care, if approved. This leaves you at home with just one income to cover all of your expenses.
What About My Other Assets?
The other consideration when determining Medicaid eligibility is the assets that are owned by you and your spouse, regardless of whose name they are held in. The Medicaid applicant cannot own assets valued over $2,000 to qualify, not including your primary home or car. You, as the community spouse, can keep half of your assets, up to a maximum of $137,400.
You might also wonder which assets are included—and which are excluded—in the Medicaid application process. Typically, liquid assets, like bank accounts, insurance policies valued over $1,500, stocks and bonds, mutual funds, and second homes and cars, are considered countable assets. It should be noted that your home and one car are not included. This is because the community spouse would continue to reside in and otherwise utilize these assets. Additional assets that are exempt from Medicaid include personal effects, burial plots, and life insurance policies valued under $1,500.
So, What Are My Options?
If your spouse needs nursing home care now, and you are faced with either having to pay out-of-pocket or qualify for Medicaid, you still have some options. You may be tempted to spend down or transfer your assets, but Medicaid will look back 5-years from your application date to ensure you did not give away money to become eligible. Medicaid qualification is a confusing area of law, so it is best to plan with an elder care attorney who can take the guesswork out of applying for Medicaid and help you to avoid common mistakes that may cause penalties and delays in approval.
If you expect your spouse will need nursing care in the not-so-distant future, it’s best to start planning immediately. This is also a good time to consult with an elder law attorney about best practices for maximizing retention of assets and nursing home care provisions for your spouse. Your elder law attorney may suggest actions like:
- Paying down existing bills: Medical bills, car loans, credit cards, etc.
- Home improvements: Repairing plumbing and heating systems, fixing the landscaping, purchasing household goods and furnishings, and making structural modifications.
- Funeral trusts: Purchase a pre paid funeral plan which in not countable and while takes care of an inevitable expense.
At this point, you’ve probably determined that paying for long-term nursing home care can be complicated at best, with so many variances and challenges depending on your unique circumstances. Proper planning should be implemented sooner rather than later to prevent costly and stressful consequences. Miller Estate and Elder Law can help you strategize in order to yield optimum benefits for you, your spouse, and—ultimately—your entire family.
Watch our FREE webinar to learn more about Medicaid eligibility and how to get your spouse qualified for the care they need, without sacrificing your life savings.
https://millerestateandelderlaw.com/medicaid-qualification-webinar