Medicaid for Your Spouse Issues and Traps
You pledged “for better or worse”, “for richer or poorer”, and “in sickness and in health”. What do you do now that things are worse, your spouse is so sick he needs round the clock care that you cannot provide at home and you are facing the prospect of becoming poorer and poorer?
As families seek Medicaid to help with the cost of long term care, they should be aware of some commonly overlooked obstacles.
Place your loved one in a facility that accepts Medicaid
Independent living and many assisted living facilities do not accept Medicaid especially in their “Memory Care” sections. Some facilities will accept Medicaid, but only after the patient has paid privately for some period of time.
It is especially important to know the facility accepts Medicaid in the case of married couples. The assets that the healthy spouse is able to keep are based on the total assets that the couple has on the date of institutionalization (the “Snapshot Date”). Paying for care in a non-qualified facility may reduce the amount of funds that the healthy spouse eventually gets to keep.
Title Assets Appropriately
To qualify for Medicaid, the ill spouse can have only $2,000 in countable assets. The healthy spouse (the spouse living at home) can keep much more. In addition to the “exempt” assets (the house, one car, household goods, funeral plots, and irrevocable funeral plans), the healthy spouse can keep half of the couple’s countable assets with a minimum of ($24,720 in 2018) and a maximum of ($123,600 in 2018). It is important to retitle assets properly to maintain Medicaid eligibility and to avoid Medicaid Recovery upon the death of the healthy spouse if possible.
Assume that the married couple has a home – owned jointly with right of survivorship, joint checking, savings and investment accounts as well as IRA’s and life insurance policies naming each other as beneficiaries. The healthy spouse, using a power of attorney or guardianship if necessary, should retitle the couples assets as follows:
- Keep the joint checking account with no more than the ill spouse’s $2,000. Deposit the ill spouse’s Social Security and other income to that account.
- Open a new account in the healthy spouse’s name alone “payable on death” to children. Have the healthy spouse’s income deposited into the new account. Transfer excess from the joint account to this new account each month to keep the joint account at $2,000 or below. Pay the household bills from the new account.
- Title the savings account and investment accounts in the healthy spouse’s name alone “payable on death” to the children.
- Name the children as beneficiaries on the healthy spouse’s IRA and life insurance policy.
- Cash out or change ownership of the ill spouse’s life insurance.
- Cash out or annuitize the ill spouse’s IRA.
- Title any vehicles in the name of the healthy spouse alone “transfer on death” to another family member.
- Title the house in the healthy spouse’s name alone.
- The healthy spouse should change her will to name children as beneficiaries.
Set up a Qualifying Income Trust for High Income Individuals
Once on Medicaid, the ill spouse’s monthly income will be used for his personal spending ($50 per month), a monthly income allowance (MIA) for the spouse at home to help meet her needs and a patient liability payment to the facility. However, if the ill spouse’s gross income is above the Special Income Limit ($2,250 in 2018) he will not qualify for Medicaid regardless of his need.
High income individuals must establish a special “Qualified Income Trust” (QIT) to filter the excess income in order to qualify. This QIT must be established and funded in the month the Medicaid Application is made. If it is not, the application will be denied. This problem is compounded by the fact that a Medicaid application can take months to process. If the QIT is not in place during those months, Medicaid will not pay.
Seeking and paying for long term care for your spouse is complex and stressful. A qualified Elder Law Attorney can help you understand the process and make a plan to protect assets and secure the best care possible for your loved one.