For many elder law clients, the possibility of future nursing home care is the greatest financial risk they face. Most families cannot afford the high cost of nursing home care, which can exceed $200,000 a year. Even families with considerable savings are at risk if a family member requires long-term care in a nursing home.
Medicaid coverage, MassHealth as it’s called in Massachusetts, helps fund long-term nursing home care for eligible residents. Seniors must qualify for Medicaid, and many families exceed the maximum asset thresholds required making it seem that they are ineligible until all of their assets have been exhausted.
Careful Medicaid planning strategies can help clients qualify for benefits, and preserve and protect assets from future nursing home and long-term care costs. A proper understanding of Medicaid law, along with careful planning, is essential to developing an appropriate plan for you and your family’s future.
Pabian & Russell’s elder law attorneys are members of the National Academy of Elder Law Attorneys and are actively engaged in continuous education to stay up-to-date with Medicaid’s ever-changing rules regarding eligibility and application processes. Our attorneys are here not only to help you plan for the future, but also to help you file Medicaid applications and, if you have been denied, file appeals to recover your expenses.
Medicaid’s rules are complex and confusing. Let us guide you and your family through the Medicaid maze and help ensure that you are positioned to receive the care and benefits you deserve.
Medicaid’s Spousal Asset Allowance
Medicaid law offers special protections for the spouse of a nursing home resident. The spouse of a Medicaid applicant (also known as the “community spouse”) is entitled to keep approximately $123,000 of the couple’s combined assets, excluding their primary residence. This spousal asset allowance applies whether the assets are held jointly by the couple, or held in the name of the nursing home spouse only. For example, if a couple has $100,000 worth of total assets on the date the applicant enters a hospital, the community spouse will be entitled to a resource allowance of $100,000. If they have $250,000 in assets, the community spouse can keep approximately $127,000 of that $250,000.
Medicaid Income Rules
While the value of assets a spouse can claim as their own is strictly limited, Medicaid treats income very differently. The income of the community spouse, for example, is always his or her own, and he or she will not have to use their income to support the spouse receiving Medicaid benefits. In some cases, the community spouse is also entitled to share in all or a portion of the monthly income of the nursing home spouse. Medicaid determines an income floor for the community spouse, known as the Minimum Monthly Maintenance Needs Allowance (MMMNA), which is calculated based on his or her housing and other costs. If the community spouse can show hardship, MassHealth may award a larger MMMNA after a hearing. If the community spouse’s income falls below his or her MMMNA, the shortfall can be made up from the nursing home spouse’s income.
Protecting the Spouse at Home
For many of the couples we represent, their biggest concern is protecting their spouse if they become sick and need nursing home care. Most of our clients have assets above the Medicaid limit. One way to protect these assets while obtaining Medicaid benefits for the spouse requiring nursing home care is through the purchase of an annuity. An annuity purchase transforms assets that could make the nursing home spouse ineligible for Medicaid into an income stream for the community spouse that cannot be factored into a resident’s Medicaid eligibility. The annuity must be irrevocable, and must guarantee a certain number of years of payment that is shorter than the life expectancy of the healthy spouse. Additionally, the amount paid back by the annuity over the life expectancy of the annuitant must be greater than or equal to the amount initially paid for the annuity. If the community spouse dies during the annuity term, the remaining payments can be made to the children and remain protected from the state. Annuities for this purpose should not be purchased until the spouse enters a nursing home.
Updating Your Will
If your spouse is ill and may eventually require nursing home care, it is crucial to re-examine your estate plan now. Many clients have wills that leave everything to their spouse, and most have powers of attorney and health care proxies naming their spouse as an agent.
If your spouse obtains Medicaid benefits for nursing home care, it is important to consider what would happen if you, the healthy spouse, passed away first. Should this happen, all of your assets would pass to your spouse in the nursing home, placing all of your hard-earned assets at risk.
Let Pabian & Russell’s experienced elder law and estate planning attorneys help you review and update your estate plan so, regardless of what the future brings, you, your spouse, and your assets are protected.