-by Dana E. Bookbinder, ESQ
Being unprepared for a health care crisis is not only a potential physical and emotional catastrophe, it can be a financial catastrophe as well. In the case of the elderly, for example, a diagnosis of dementia, Alzheimer’s, Parkinsons, cancer, or ALS, or the occurrence of a stroke is likely to require long term care at some point. Most seniors are unprepared to pay for their long-term care needs. Nursing homes in America can exceed $11,000 per month, and extensive home care can exceed $5,000 per month. Therefore, in this country, a health care crisis for one spouse can quickly impact his spouse’s ability to meet basic expenses.
Unless an individual has sufficient long term care insurance, before qualifying for public benefits, he would need to spend his cash reserves, retirement assets, life insurance cash amounts, investments, properties, and income on his own long term care. Statistics show that over half of all nursing home residents in the U.S. are Medicaid benefit recipients, which means that they generally have less than $2,000 in resources available to pay for care. Once an individual requires long term care, he can easily outlive his money.
Medicaid is a last resort subsidy for Americans facing long term care expenses. Health insurance and Medicare are designed to pay only for short term acute and subacute care.Even insurance policies spawned by the Affordable Care Act do not cover long term care expenses.
Unlike Medicare, Medicaid is a program based on financial need with rules that substantially impact the spouse of a Medicaid recipient, regardless of whether the spouse requires care herself. For over twenty years now, the program has provided some protection for spouses against impoverishment, but the resource limitations and rules are exceedingly strict
The amount of the healthy spouse resource allowance is based on one half (1/2) of the couple’s combined total assets as of the first period of continuous institutionalization for one of the spouses, or as of the time when it can be determined that care is medically necessary for one spouse. The primary residence is not factored into the total if the Medicaid applicant is married. Few other assets may be exempt from the calculation as well.
For 2014, the allowance throughout the country is subject to a maximum of $117,240 and a minimum of $23,448. Therefore, if a married couple is determined to have $500,000 in assets considered “countable” for Medicaid eligibility purposes as of the time one spouse requires institutionalization, for example, the healthier spouse’s assets will be limited to $117,240. Everything else must be spent down or otherwise protected before Medicaid eligibility will be granted to cover the cost of care.
Although federal law provides that a married couple’s primary residence may be retained by the spouse living at home, if the ill spouse passes away after having received Medicaid benefits, the state that paid the Medicaid benefits can place a lien on that residence.
The spousal protection laws also entitle the spouse of a Medicaid recipient to receive a minimum amount of income each month. Generally, the income of an individual who is institutionalized must be forwarded to his nursing home. However, his spouse may retain her own income plus, depending on the amount of her income, a monthly allowance to be taken from the institutionalized spouse’s income to bring her to a total of $1,938.75 monthly. To retain more income, the spouse must request a hearing. Even with the rules designed to protect the spouse from impoverishment, the spouse often struggles to maintain the house.
Especially in light of current trends throughout the country to make Medicaid benefits tougher to access by the public, seniors and families need to educate themselves early in the process. With stricter financial eligibility requirements, individuals who do not plan in advance must spend down their own assets to the detriment of their own future needs as well as those of their spouse.
An elder law attorney can help an individual or couple to maximize savings within legal limits even if he or she does not own long term care insurance. Protecting money not only can help a spouse maintain her homestead, but it can open more options for health care support services at home or in an institutional setting.