by Julian E. Gray, CELA

No, this is not an article on divorce. However, having to give away half of your marital estate and then going on with your life with what’s left because you need long term care is just as bad. In fact, as you will see in this article, sometimes you may have to part with more than half. It’s like divorce without a bad marriage. When a married person enters a nursing facility for long term care, the financial repercussions can be devastating to the spouse living at home. The typical retired couple can ill afford to pay the $6,000 per month average monthly nursing home cost. (And in case you didn’t know, Medicare only covers 20 full days of skilled nursing care before the $105 per day copay kicks in.) Even if a couple could scrape together the monthly nursing home cost, how would the “community” spouse living at home afford the basic costs of living as well as the upkeep of the family home? Statistics tell us that one out of two people will need long term skilled nursing care at some point in their lives. Since our current elderly population typically cannot afford long term care insurance at this point, it’s not surprising that over half of nursing home residents are being paid for by the Medicaid program.

In short, Medicaid pays for skilled nursing care and prescriptions for those who meet certain health and financial eligibility requirements. There are different eligibility requirements for married people versus singles, so this article will only focus on the former. The spousal anti-impoverishment rules of the federal Medicaid laws force nursing homes to disclose the minimum amount of assets that the community spouse is allowed to retain in order to qualify his or her spouse for benefits. Unfortunately, many people believe that this is the maximum amount of assets that can be preserved. It goes something like this:

Generally, when a married person enters a nursing home, they are given a form to complete which lists all of their assets. This disclosure includes stocks, bonds, CD’s, life insurance, bank accounts, etc. This information is sent to the Pennsylvania Department of Public Welfare (“DPW”), who returns a notice to the community spouse indicating the amount of assets DPW believes that the community spouse can retain and still qualify the nursing home spouse for Medicaid benefits. DPW calls this amount the “Community Spouse Resource Allowance”. It is basically derived by dividing the married couple’s total “countable” assets (by DPW’s standards) and divides them in half. The community spouse is advised of his or her resource allowance and it is implied that the rest should be spent down to pay for nursing care until the nursing home spouse’s share is $2,400. Furthermore, don’t assume you actually get to keep half. The “half” so to speak, is currently limited to about $90,000. So people with more than $180,000 in countable assets frequently spend down more than just half.

Unfortunately, many people take DPW’s resource assessment notice at face value and never bother to investigate their options. There are a myriad of planning options available to the community spouse if he or she acts timely once a long term care situation arises. Over the years, I have helped clients to protect far greater than the “half” DPW would promote. In some cases, the community spouse may be able to protect all of the marital assets. That depends on various factors, most of important of which is the timing of obtaining good legal advice. So, before you part with “half” (or more), get the facts and see how the other half lives.

Copyright 2003 Julian E. Gray - Published in Pittsburgh Boomers Magazine, (various editions)

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