Protecting a Spouse Remaining in the Community
When one spouse is facing a long-term care need, the initial focus is on the health needs of the spouse who will need long-term care (the “institutionalized spouse” or “IS“); yet, once the care needs have been determined and placement or home care is secured, then the focus necessarily turns towards the needs of the spouse who does not need care (the “community spouse” or “CS”). Without planning or education, it is possible for all funds, including income and savings, to be expended on the institutionalized spouse, leaving the community spouse with little or nothing.
For individuals needing long-term care, there are a number of ways to pay for care, all of which should be considered when facing such a large expense. Should one spouse need nursing care for a long period of time, then it is wise to consider Medicaid as an option to assist in paying for care. Many have misconceptions about the Medicaid program, and there are numerous myths about Medicaid and nursing care. The realty for many is that Medicaid payment of nursing care expenses is the only way that both an institutionalized spouse and a community spouse can be cared for both physically and financially. Most importantly for married couples, federal Medicaid policy takes the needs of a spouse into account and offers financial protections specifically for the community spouse.
There are a number of requirements for Medicaid eligibility but of most concern is the “income” and “asset” requirements. Practically speaking, income is considered to be amounts paid regularly to the applicant, such as social security, retirement pensions, or annuity payments. While the definition of income can be much more complex than described here, generally, so long as the applicant’s monthly income is less than the private pay rate of the nursing facility, then the applicant meets the income requirement for Medicaid. If the individual takes advantage of Medicaid’s home and community-based waiver services, then the income in Virginia is $2,313 and North Carolina is $1,012. Note that, for purposes of eligibility, only the income of the spouse applying for benefits is relevant. Therefore, if the spouse remaining in the community has income which exceeds either the private pay rate of the nursing facility or the above waiver limits, then the applicant still meets the income requirements. Unfortunately, often it is the institutionalized spouse who has the greater income. While the community spouse’s income is not considered for eligibility, it is considered when looking at what the institutionalized spouse may need to contribute towards his or her cost of care. Federal Medicaid policy requires that each state create a Minimum Monthly Maintenance Needs Allowance (“MMMNA”) and, if the community spouse’s income falls below the MMMNA amount, then the institutionalized spouse will be directed to contribute an amount from his or her income to the community spouse in order to provide that the community spouse has income of at least the MMMNA. In addition, there are circumstances in which an even greater contribution from the institutionalized spouse may be allowed if the community spouse can demonstrate a need. Currently the MMMNA for Virginia is $2,057.50 and North Carolina is $2,058.
Even more concerning than monthly income, is often what happens to a couple’s assets (“assets”) if one spouse has a long-term nursing care need. As with income, federal Medicaid policy includes protections for a couple’s assets, ensuring that the spouse remaining in the community may continue to have assets to use for his/her needs. Unlike with the income requirement for eligibility, Medicaid policy does consider the assets of both spouses for eligibility purposes. However, there are two key factors which protect the community spouse. The first is that certain assets are excluded when reviewing eligibility requirements; essentially, some assets just don’t count. A prime example and of great importance is the couple’s primary residence. Examples of other assets which don’t count are funerals or burial arrangements, the value of one vehicle, term life insurance, certain annuity contracts, certain loan arrangements, and more. In addition to allowing certain assets to not count, the community spouse is allowed to keep a percentage of the couple’s combined countable assets up to a maximum of $126,420 (the same in both Virginia and North Carolina). There was some concern toward the end of last year that this CSRA allowance would no longer apply to home and community-based services; however, Congress has agreed to continue to make allowances for the CSRA even in a home setting. This amount is known as the Community Spouse Resource Allowance (“CSRA”). Therefore, Medicaid policy allows a community spouse to continue to maintain countable assets up to the CSRA in addition to an unlimited amount of non-countable assets.
Thus, a community spouse can be financially protected, even if his/her spouse needs nursing care. Unfortunately, many couples fear financial ruin of chronic illness and have considered drastic measures such as gifting away their property or getting a divorce; or, they mistakenly think that this type of planning needs to be done five years before nursing home placement . However, this advance planning is not necessary, and no such extreme measures are required to protect a spouse remaining in the community.
Ask Kit Kat: Orca Calf in Northwest
Hook Law Center: Kit Kat, what can you tell us about the newest orca calf born in the Pacific Northwest?
Kit Kat: Well, this is very good news indeed! A new orca calf was spotted in mid-January 2019 in Admiralty Inlet, at the north end of Puget Sound. Observers are not sure whether it’s male or female, but it belongs to the L pod, and will be known as L124 for now. At the time of sighting, it appeared to be about 3 weeks old. No calves born to this pod have survived to adulthood since 2015, so everyone is hoping for the best. The L pod has shrunk to 35 in number. A decline in the Chinook salmon population, its main food source, appears to be the reason for the decline, as well as water pollution. Other groupings of orcas who do not live so close to industrialized areas are faring better.
L pod, along with J and K pods, comprise a group known as the Southern Residents. In its heyday, the Southern Residents numbered about 100. Today, there are approximately 75. J pod became famous last year, when one of its calves died shortly after birth and her distraught mother, J35, pushed her corpse around for 17 days using her nose, before letting her go. J35 may soon lose her mother, J17, who appears to be hungry and weak, according to Melisa Pinnow, a biologist with the Center for Whale Research, which is based in Washington State. Orcas must swim to feed and survive. When they can no longer do that, they die. The Southern Residents are organized around the females. Grandmothers live with their daughters and help young mothers raise their calves. Older females even go through menopause like humans do.
Washington State established a task force last year to look at what could be done to help the orcas. Among the recommendations were 1) to remove certain dams to let rivers take their natural course, 2) to remove net pens of farmed salmon, and 3) to cut back on salmon consumption, generally. Time will tell whether these recommendations will have a positive impact. (Jacey Fortin, “Orca Cal Offers Hope for a Fading Group in the Pacific Northwest,” The New York Times, Jan. 17, 2019)
Letha Sgritta McDowell
757-399-7506 | 252-722-2890
Letha Sgritta McDowell is a Shareholder of Hook Law practicing in the areas of estate planning, elder law, special needs planning, estate and trust administration, asset protection planning, long-term care planning, personal injury settlement consulting, guardianships & conservatorships, and tax law. Ms. McDowell’s clients range from high-net-worth individuals with over $75 million in net worth to families with limited assets.
Ms. McDowell is a past President of the National Academy of Elder Law Attorneys and was named as a Fellow of the prestigious American College of Trusts and Estates Council (“ACTEC”) in 2020. She is certified as an elder law attorney by the National Elder Law Foundation (“CELA”) and Board Certified as a specialist in Elder Law by the North Carolina State Bar Board of Legal Specialization. Furthermore, McDowell is accredited to prepare and prosecute claims with the Department of Veterans Affairs.
Ms. McDowell is currently the chair of NAELA’s strategic planning committee, a member of the Board of Directors for the North Carolina Chapter of NAELA, and a member of the Board of Directors for the Purdue Center for Cancer Research. She is the former Chair of the North Carolina State Bar’s Elder Law Specialization Committee and is the former Editor-in-Chief of “Gray Matters”, the newsletter for the Elder Law Section of the North Carolina Bar Association. She is a consultant for InterActive Legal and has worked on several law and technology initiatives including IBM’s Watson project. Along with her experience practicing as an attorney, she has dedicated much of her time writing for national publications including, but not limited to: Wolters Kluwer, Wealthmanagement.com, the NAELA Journal, Trust & Estates Magazine and many more.
- Elder Law
- Estate & Trust Administration
- Estate Planning
- Asset Protection Planning
- Long-Term Care Planning
- Special Needs Planning