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PREPARING A MARRIED COUPLE TO PAY FOR NURSING HOME COSTS

The thought of putting your spouse into a nursing home is an unpleasant thought which is only magnified by the reality of how much it costs.  Local nursing home costs generally range from $8,000 to $10,000, depending on the level of care and medications you need.  Those kinds of numbers are petrifying to most couples, even with the knowledge that Medicaid will eventually pay for those nursing home costs.  Many people believe that they need to deplete all or most of their savings in order to qualify for benefits which obviously would be a negative result for the healthy “community spouse” who needs to be able to support the remainder of their life.  Unfortunately, the “system” does not do the best job in educating and advising the married couple what will or can happen when one of them is about to enter a nursing home.  If you are armed with the proper knowledge and engage in some relatively easy planning, the process can not only be much less frightening but also not nearly as financially devastating as it needs to be.
Medicaid is a federal program administered by the states that provides medical benefits to those with limited assets.  If the nursing home patient spouse’s income and resources fall below established minimums the patient spouse will qualify for Medicaid and all nursing home expenses will be paid by the government.  The rules for married couples include certain “spousal impoverishment” provisions which in theory are designed to keep the community spouse at the same standard of living that he or she enjoyed prior to admitting their loved one into a nursing home.
Generally, the process proceeds as follows:  When the patient spouse is admitted to the nursing home the couple will be given a packet of Medicaid information which includes a one page Resource Assessment form.  This form needs to be filled out showing the value of all assets owned by the couple either individually or jointly with values as of the date of admittance.  The Department of Public Welfare then uses these amounts to determine what assets are protected for the community spouse and what assets need to be spent down in order for the patient to qualify for Medicaid.  First, any excluded assets are removed from the calculation and will forever remain assets of the community spouse (as long as the assets, such as the personal residence, are re-titled to the community spouse’s name only).  Excluded assets include the personal residence of the couple with a value up to $500,000, one automobile, the tangible personal property owned by both spouses, any qualified accounts (401k or IRA) owned by the community spouse, a patient spouse whole life insurance policy up to $1,500 cash value, term life insurance on either spouse, and pre-paid funeral accounts for both spouses.  Once all of these assets are subtracted from the Resource Assessment, the remaining individual and joint owned assets are added up and divided by two.  Half of those assets are considered the protected share of the community spouse up to a maximum amount of approximately $110,000.  The other half is earmarked for the patient spouse and based upon the patient spouse’s income either $8,000 or $2,400, is exempted and the remaining balance must be “spent down” in order for the patient spouse to receive Medicaid benefits.
As you can imagine, some couples are not financial ruined by this process especially if the community spouse has sizeable qualified accounts.  But even better news is that with proper timing the “spend down” assets can be quickly spent on items which will benefit both the patient spouse as well as the community spouse in order to make the community spouse’s life more comfortable.  For example, these monies can be spent on pre-paid funerals for both husband and wife, a new car for the community spouse which has a warranty, major repairs and improvements to the personal residence to not only help the community spouse save money in the future but to add value to the home for when it may be sold or inherited, paying off debts of either spouse such as a mortgage, car loan or credit cards, taking a vacation, and just about anything which benefits either spouse and is not a gift to a third party.  In some cases, if timed properly the patient’s “spend down” assets are spent almost entirely on the community spouse while paying very little to the nursing home as a private pay patient.
It is important to at least consult an attorney as early as possible in the process so that your individual assets can be analyzed and a simple plan can be developed in order to best protect the community spouse.  In some situations having representation throughout the entire approval process is essential, such as when the couple owns a vacation home which they want to remain in the family or if the community spouse’s income is extremely low and you are worried that you won’t be able to make ends meet once the patient spouse passes away and Social Security and pension income stops.
Nursing home administrators or even DPW do not always or cannot inform you of all of your rights and options in these situations, therefore many couples make incorrect and irreversible financial moves which ultimately reduce the amount of money the community spouse was entitled to keep.  In conclusion, if you believe that you or your spouse may face a nursing home in the future or you are already in that situation consult an attorney who is experienced in Medicaid representation.  He can help you do everything possible to protect the maximum amount of assets for the community spouse.

Please consult the Office of Kozloff Stoudt to discuss this matter or any other matter regarding your Estate Planning needs. You can visit us at www.kozloffstoudt.com.

 

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