Previously, we have looked at the difference between Medicare coverage of skilled nursing coverage and what happens after that coverage ends. Typically, the individual requiring skilled care will now either go home, become a private pay skilled nursing resident, or qualify for Medicaid benefits. If the person is private pay, they (or their family) will be expected to write a check each month for between $4500 and $7000 per month (depending on the facility, private room vs. semi-private, etc.). For the families that can’t afford this, Medicaid (or MoHealthnet as it is officially known) is the only other alternative. This article will attempt to explain the basic eligibility standards for a married couple, and also briefly explain some of the more basic planning options that are available.
When an individual enters a skilled nursing facility, and will spend at least 30 days in the facility, and has a spouse that lives anywhere other than a skilled facility, they are entitled to have a division of assets assessed. This is a two-stage process, with the first step being dividing the assets that the couple has (note that there is no distinction as to whose name the assets are in) into two categories, countable or non-countable. The easiest explanation is that every asset is countable, unless it falls into one of the five categories of non-countable assets. These are 1)The primary residence, as long as the value doesn’t exceed $500,000, 2) One car, 3) $1500/person cash value of life insurance OR a prepaid funeral plan and burial plot/person, 4) The personal property of the couple, and 5) Business or income producing property.
So, countable assets include all of the bank accounts, IRA’s, stocks, bonds, mutual funds, savings bonds, extra cars or real estate, and insurance. Once the countable assets are determined, this number is divided in ½. So, if the couple has $200,000 of assets, ½ or $100,000 will be considered to be the spousal share, and the other ½ will be the spenddown amount. The spenddown amount will need to be reduced to $1,000 or less before the individual receiving care will be eligible for Medicaid benefits. However, if that same couple had $300,000 in countable assets, the spousal share would be the federal maximum of $109,560, and the spenddown amount would be $190,440. This is because the federal government wanted to ensure that Medicaid would largely be a program that provided care for the lower and middle class, and not allow someone with substantial assets to qualify for Medicaid coverage.
When couples are not significantly above the threshold of assets that the community spouse (the person who doesn’t need care), there are some relatively easy steps that can be taken in order to complete the spenddown and qualify for Medicaid benefits. These could include the purchase of prepaid funeral plans for both the husband and wife, spending money on home improvements, paying down mortgage or credit card debts, or perhaps purchasing a new car for the spouse still at home. At some point, there reaches a point where no more of these basic strategies can be used. At that point, the two most likely scenarios are paying the nursing facility until the spenddown is complete or, under certain circumstances, the community spouse can make a case that they need additional assets in order to produce a level of income that is sufficient to allow them to live independently in the community. Typically, this level of income will be between $1,822 and $2,739 per month. The actual logistics behind this approach are beyond the scope of this article, but this is a perfect example of where a consultation with a qualified elder law attorney can make the difference between spending tens of thousands of dollars or more, when it was not necessary. This area of the law is very much a specialty, and there are few places that families can turn to receive high quality advice. However, this advice is often worth its weight in gold- if only families know to ask for help from qualified experts. This is why elder law attorneys can be so incredibly valuable to families.