Most people would like to receive care in the comfort of their own homes when they need it.  Sometimes though, a spouse is too ill or disabled for that to be a safe option.  That’s when a skilled nursing facility is appropriate, and can give the well spouse peace of mind.  An Elder Law attorney can help you with Medicaid eligibility requirements for coverage of such care.

If your spouse needs nursing home care, here’s how to be sure you’re both protected to the greatest extent possible.

If your spouse needs to enter a nursing home, you ideally want to preserve all the money and assets you’ve accumulated over a lifetime of hard work. That way you can continue your secure lifestyle, and use your financial resources as necessary to make your husband or wife as comfortable as possible.  It’s all achievable with good Elder Law planning.  Lamson & Cutner Elder Law attorneys help New Yorkers create and implement Medicaid strategies that protect both the ill spouse in the nursing home and the “community spouse” who remains at home.

The financial challenge a married couple will face when one partner needs nursing home care.

Many married couples who have planned for retirement believe they are in a comfortable financial position.  The mortgage is paid off or their rent is reasonable; they have managed to save some money and have invested it wisely; and they have Social Security retirement benefits, a pension, and distributions from an IRA or a 401(k) plan.

However, when the need for nursing home care arises, suddenly financial stability is out the window.  Who can afford to pay $15,000 per month (or more) on nursing home care? Savings evaporate quickly, and monthly income is often totally inadequate to cover all the expenses.

In addition, if the couple’s assets are being used up to pay for the ill spouse’s care, what does this mean for the community spouse?  Medicaid makes allowances for the assets and income of community spouses, as described below, but although these allowances work for some people, many others are left in an extremely vulnerable financial position.

Transferring Assets Between Spouses to Qualify One for Medicaid

In order for the ill spouse to achieve Medicaid eligibility (assume it’s ‘he’ this time), he can transfer his assets to the well spouse (known as the “community” spouse, and let’s make it ‘her’).  Medicaid does not penalize one spouse for transferring assets to the other spouse.   If the ill spouse’s assets are below $15,900 (in 2021), he will then be eligible for Medicaid.  However, there’s a catch: if the well spouse’s assets are above a certain level, called the Medicaid “Community Spouse Resource Allowance” (CSRA), Medicaid will look to the well spouse to contribute to the ill spouse’s care until her assets fall below the CSRA.  The CSRA is calculated by a formula, and is not the same for everyone, but the maximum CSRA in 2021 is$130,380.

Spousal Refusal

There’s a way to minimize the damage.  In New York, the well spouse is permitted to decline to pay for the ill spouse’s care.  This is called “spousal refusal.”   In New York this is such a common practice that Medicaid has a Spousal Refusal form that people sign.  Medicaid cannot refuse to provide services to the ill spouse, so the ill spouse will begin receiving Medicaid services.

Medicaid can and frequently does attempt to recover the cost of the services it provides to the ill spouse by billing the well spouse, but there are two reasons Spousal Refusal is still a good idea.  First, many such bills are open to the possibility of being negotiated.   Second, even if Medicaid pushes to recover all the costs of the services they provided, they bill the well spouse at the Medicaid rate, which is usually much lower than if the well spouse had paid with private funds.  Thus the well spouse will at least receive a significant discount on the cost of the services to the ill spouse.

Income Doesn’t Affect Medicaid Eligibility, But It Is Not Ignored

The spouse in the nursing home (assume the husband) is required to contribute all his income except for $50 to the home, with a couple of wrinkles.  Wrinkle #1: If his wife’s income is above the unfortunately named “Minimum Monthly Maintenance Needs Allowance” (MMMNA) of $3,259.50 (in 2021), she is required by Medicaid to contribute 25% of the amount in excess of the MMMNA to the nursing home.  Wrinkle #2: On the positive side, if her income is below $3,259.50 per month, she is entitled to as much of her husband’s income as will bring her up to the MMMNA.

These allowances are certainly helpful.  However, for many community spouses, reducing their assets down to $130,380 (or below) and subjecting monthly income to the MMMNA requirements, can create a vulnerable financial situation.  If the well spouse develops a need for care herself, or wishes to supplement care of her ill spouse with, for example, a private aide a few hours a week, she could exhaust her monetary reserves very quickly.

How a Lamson & Cutner Elder Law Attorney can protect you from a financial crisis.

What a couple can do for each other and their family.

With proper Elder Law planning, you can retain the benefit of a significant portion of  your money and assets, rather than spending down to Medicaid levels.  That way the nursing home is paid for, and you can maintain your lifestyle.  Here’s a three-step plan to accomplish that result for you.

Step 1:  If you own a home, transfer it to the “community” spouse, who does not need nursing home care.  Medicaid classifies this as an exempt transfer, and it is not subject to a penalty.

Step 2:  In addition, transfer liquid assets such as savings and securities, and any other Medicaid “resources” to the “community” spouse, to the point where the ill spouse’s resources make him eligible for Medicaid.  These too are exempt transfers, and protect your cash and other assets from having to be used to pay for nursing home care.

Step 3:  Sign the Spousal Refusal form, and then apply for Medicaid for the “ill spouse.”

Step 4:  Once your spouse is in the nursing home, and Medicaid benefits are approved, you should consult an Elder Law attorney about taking Elder Law and Estate Planning steps of your own.

Because of laws requiring spouses to support each other (“in sickness and in health”), you may not be able to protect all your assets, as Medicaid has a right to seek reimbursement of its costs.  “Spousal refusal” still has advantages, and frequently produces large savings.  But to make sure you are taking the right step, we recommend talking to an Elder Law attorney.  Analyzing the situation with a professional who deals with this issue on a regular basis can help you clarify the benefits and risks associated with this strategy.  You can read more about “spousal refusal”  here.

The benefits you receive with this approach.

This sequence of strategies typically results in significant savings.  You will at a minimum achieve a significant discount over the amount you would otherwise have paid for nursing home care for the ill spouse.  As the healthy “community” spouse, these savings will better allow you to  continue to live in dignity and comfort.  You’ll have funds to supplement the care provided to your spouse by the nursing facility, and make his or her stay there more pleasant.