Protecting Assets When A Spouse Enters A Nursing Home
As an Elder Law attorney, I often see the devastating toll the cost of nursing care can have on a married couple’s assets. The most upsetting cases involve healthy spouses that have essentially been impoverished as a result of the unhealthy spouse’s need for care. The basic fact is that such impoverishment can be completely avoided with proper guidance as a result of the Medicare Catastrophic Coverage Act of 1988 (“MCCA”), which essentially provides a framework to prevent spousal impoverishment under the Medicaid rules. While it would be nearly impossible to debunk all the myths pertaining to Medicaid we address, there are a few common ones that we at the Hook Law Center see most often.
Myth – They only look at one spouse’s assets when determining eligibility.
Resources held by either the institutionalized (the spouse that needs care) or community (the spouse that does not need care) spouse shall be considered available to the institutionalized spousal however, certain exclusions apply to various assets. For example, some assets, such as the primary residence of the community spouse, is a non-countable resource for Medicaid eligibility. Additionally, the MCCA sets forth an exemption amount, known as the community spouse resource allowance, to ensure there is a small safety net for the community spouse. Currently, the community spouse resource allowance is 50% of the total countable resources of the couple up to $120,900, with a floor set at $24,180. The countable assets of the couple above the community spouse resource allowance must then be “spent down.” A spend down, to an elder law attorney, merely means the conversion of a countable resource to either a non-countable resource or a new income stream, and does not necessarily mean that money needs to be spent. Once the institutionalized spouse is eligible for Medicaid, the resources and income of the community spouse will not be considered for continuing eligibility of the institutionalized spouse.
Myth – I can’t gift money to my spouse because of the 5-year look-back period.
The Virginia Medicaid manual has a blanket exemption for transfers between spouses. This permits spouses to transfer assets between another without risk of a penalty period for the transfers. The tough analysis associated with these transfers include whether someone has the legal authority to transfer assets to the community spouse (via a power of attorney or conservatorship that expressly permits such gifts) and what tax implications, if any, would result in such a transfer.
Myth – Medicaid is going to take my house.
Medicaid does not take anyone’s home, let alone the primary residence of a community spouse. Instead, the Medicaid considers the primary residence of a community a non-countable, or exempt, resource when determining eligibility. This myth, I believe, arises from the fact that if a single individual does not reside in real property for 6 months then the home must be listed for sale, and that Medicaid may put a lien against the home upon the death of a Medicaid recipient. The fact remains, that while the house may need to be sold or when the house sells, Medicaid may be entitled to some of the proceeds, Medicaid does not actually take the home.
Myth – We have too much money for Medicaid.
With proper planning, most couples can protect their assets and qualify as an institutionalized spouse for Medicaid. The planning, as previously mentioned, requires the conversion of countable resources to non-countable resources or a new income stream and does not require the impoverishment of the community spouse. The plan should be custom tailored to each couple, and what works for one, may not work for another. As a result, you should consult an experienced elder law attorney to develop a plan that will work for you.
Ask Kit Kat – ECPI to the Rescue
Hook Law Center: Kit Kat, what can you tell us about ECPI helping a 3-legged dog walk again?
Kit Kat: Well, this is a wonderful story. A four-year-old beagle named Ray Ray lives in Norfolk. He’s had quite a lucky life in some respects, and unlucky in others. The unlucky part is that a couple of years ago he was in an accident, and had to have his back right foot amputated. That led to other problems like gait and stress issues on his remaining legs.
Now comes the lucky part. His first bit of luck was to be adopted by Susan and Phil Glassner of Norfolk. To do so, Ray Ray had to move from North Carolina where he had been taken in by a rescue group. He loved his new home, and the other two dogs who already lived with the Glassners. However, dealing with a missing foot was causing stress on his hips and spine.
Then came his second piece of good luck. His mother, Susan, happened to see on Facebook a post about some students at ECPI’s Richmond campus who had made a prosthetic arm for a child. Susan had a friend who worked at ECPI’s Virginia Beach campus, Nadine Newhart, who contacted the Richmond campus for her. It was an incredible feat of timing! The engineering students at ECPI’s Richmond campus needed a project for their senior capstone class. The students got to work on it, and within no time they created a prosthetic leg for Ray Ray. The new leg is supported by a harness and wheel combination that allows Ray Ray to make turns. The students had to be quite creative, because the leg had to be made of certain materials which Ray Ray would not destroy by chewing.
So thanks to ECPI students, who used their ingenuity and technical smarts, Ray Ray is enjoying life once more as a four-legged canine! (Robyn Sidersky, “ECPI students accomplish a real feat, and an amputee dogs gets a prosthetic limb,” The Virginian-Pilot, November 3, 2017, pg. 3)
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