The ABCS of Medicaid Eligibility – Part 4: Income, Assets, and Spousal Protections

TREATMENT OF INCOME

When a nursing home resident becomes eligible for Medicaid, all of his or her income, less certain deductions, must be paid to the nursing home. The deductions include a $72.80-a-month personal needs allowance, a deduction for any uncovered medical costs (including medical insurance premiums), and, in the case of a married applicant, an allowance he or she must pay to the spouse that continues to live at home.

SPOUSAL PROTECTIONS

Assets

Medicaid law provides special protections for the spouse of a nursing home resident, known in the law as the “community” spouse. Under the general rule, the spouse of a married applicant is permitted to keep one-half of the couple’s combined assets (as of the date of institutionalization) up to $123,600 (in 2018). In addition, there is a minimum asset allowance for the nursing home spouse of $2,000.

For example, if a couple owns $90,000 in countable assets on the date the applicant enters the nursing home, he or she will be eligible for Medicaid once their assets have been reduced to a combined figure of $47,000 (2,000[JC1] for the applicant and $45,000 (one half of $90,000) for the at-home spouse). If the couple owned $250,000 in assets, the spouse in need of care would not become eligible until their savings was reduced to $125,600 ($2,000 for the nursing home spouse, plus a maximum of $123,600 for the community spouse).

The determination of the level of the couple’s assets is made as of the date of institutionalization of the nursing home spouse. That date is the day on which he or she enters a hospital or a long-term care facility in which he or she then stays for at least 30 days. It is advantageous for the couple to try to have as much money as possible in their names on that date (up to $249,200) so that the amount the community spouse is allowed to keep is as high as possible. An experienced estate planning attorney can help

Income

In all circumstances, the income of the community spouse will continue undisturbed; he or she will not have to use his or her income to support the nursing home 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. MassHealth determines an income floor for the community spouse, known as the minimum monthly maintenance needs allowance, or MMMNA, which, under a complicated formula, is calculated for each community spouse based on his or her housing costs. (Where the community spouse can show hardship, MassHealth may award a larger MMMNA, but only after an appeal to fair hearing.) The MMMNA may range from a low of $2030 (in 2018) to a high of $3,090 (in 2018) a month. If the community spouse’s own income falls below his or her MMMNA, the shortfall can be made up from the nursing home spouse’s income.

Once MassHealth is obtained, the nursing home spouse’s income will be applied, less the personal needs allowance (72.80), to pay for nursing home expenses. MassHealth will pay the difference.

Increased Resource Allowance

Those community spouses whose own income is less than their MMMNA have an alternative to receiving the shortfall from the nursing home spouse. Instead, they may petition for an increase in the standard resource allowance so that these additional funds may be invested in order to generate income to make up the shortfall. Given current low rates of return, this often can permit the community spouse to retain a substantial level of savings. In some instances, even with the award of the higher resource allowance, the community spouse will need to draw on the nursing home spouse’s income to some extent. Unfortunately, MassHealth may not award an increased resource allowance upon application. The intake worker must award the standard allowance described above and the applicant must appeal the determination to a fair hearing.

Applying for Medicaid is cumbersome and tedious. Every fact asserted in the application must be verified by documentation. The application process can drag on for several months as MassHealth demands more and more verifications regarding such issues as the amount of assets and deadlines on a timely basis, MassHealth will deny the application. In addition, after Medicaid eligibility is achieved, it must be re-determined every year. The community spouse, however, may have greater assets and income at such point without causing the institutionalized spouse to lose MassHealth coverage.