Don’t impoverish your spouse if you go on Medicaid.
While meeting with a client, I learned that his father had recently gone into a long-term care facility, that his mother was still in their home and that he was spending down their money so that his father could qualify for Medicaid. I explained to my client that federal law allowed his mother to retain a large amount of their assets and that his Mom didn’t have to become impoverished for his dad to qualify for Medicaid.
Let’s review the Medicaid rules as it applies to this case. In addition to filing the Medicaid application, the husband should file a Community Spouse Resource Allowance, which allows his wife to retain certain assets.
Medicaid categorizes resources as exempt assets and countable assets. Exempt assets include the following:
- Primary residence
- Personal household goods
- One vehicle
- Prepaid funeral
- IRAs
- Some specific Life Insurance Policies
Countable assets include:
- Cash
- Savings and checking accounts
- Cash value of insurance policies
In this example, in addition to the exempt assets, the wife can retain one-half of the countable assets up to $119,220. For example, if the couple has $238,440, the wife can retain one-half, which is $119,220.
To be eligible for Medicaid, the husband cannot have more the $2,000. If he has more than $2,000, he cannot give money away (except to a disabled child); however, he can use the money to pay off their debts, make repairs to their home, upgrade their car, prepay their funerals, pay legal expenses and pay for his care.
Once the husband becomes eligible for Medicaid, he will sign a Marriage Settlement Agreement and transfer all of his assets to his wife.
One final point, now that all the assets belong to the wife, if by chance she dies before the husband, all of the wife’s assets will go back to him making him ineligible for Medicaid. To avoid this, the wife, should make a Will that includes a Special Needs’ Trust for her husband. Then if the wife dies before the husband, the assets do not go to him, but are held in a trust to be used for his benefit. In this way he remains eligible for Medicaid.
Tom Packer is an Elder Law Attorney serving all of Southeast Idaho. As part of his law practice, Tom offers Life Care Planning to deal with the challenges created by long-term illness, disability and incapacity. If you have a question about a Senior’s legal, financial or healthcare needs, please call us.