The rules for Medicaid (the federal/state program which helps low-income people pay long-term medical and custodial care costs) benefits can be tricky for married couples, especially when only one spouse needs the benefits.
Medicaid assumes that both spouses of a married couple are financially responsible for one another. As a result, when Medicaid determines a spouse’s eligibility for benefits, the assets of the husband or wife who isn’t applying — known as “the community spouse” — are expected to contribute to the care of the other.
The Law Protecting Spouses
That’s why the full financial history of both spouses is assessed when ascertaining Medicaid eligibility. However, The Spousal Impoverishment Act protects the community spouse from becoming severely impoverished. The guidelines specify the community spouse’s ability to keep some income and assets, while still allowing the applicant the option to obtain Medicaid benefits.
(MORE: Qualifications for Medicaid Benefits)
As a general rule, the husband or wife who isn’t applying for Medicaid benefits may keep up to half of both spouses’ joint liquid assets. But there is a limit to the amount of “countable” assets that the non-applicant spouse can keep. Known as the Maximum Community Spouse Resource Allowance (or CSRA), the limit is currently $117,240. Next year, the limit will rise to $119,220.
Please note: Medicaid qualification guidelines vary from state to state and may change from year to year.
An Example of One Married Couple
Here’s an example to show you how Medicaid eligibility would be determined. In this hypothetical, John and Suzan are married and Suzan wants to receive Medicaid benefits:
John and Suzan have been married for 45 years and John is worried that Suzan may need 24-hour care in a skilled nursing facility. Both spouses are receiving monthly Social Security income. They also have combined cash reserves of $250,000, in Suzan’s checking and savings accounts and John’s IRA.
Will Suzan be eligible to receive Medicaid coverage once she is admitted to the nursing home?
(MORE: Medicaid and Your Parents: The Basics)
On the first day of the first month Suzan will be admitted to the nursing home, a snapshot of the couple’s joint assets will be taken to assess how much of their funds that John can keep. Since the community spouse’s Medicaid portion is half of both spouses’ joint assets, if the 50 percent portion exceeds the maximum CSRA, it must be spent down to that level. If it’s less than the minimum CSRA, the community spouse may keep up to the minimum amount.
Since John and Suzan’s joint liquid assets amount to $250,000, the 50 percent figure would be $125,000, leaving the couple $7,760 in excess of the maximum CSRA. So John and Suzan would have to spend down their assets until they reach the maximum CSRA; only then would Suzan be eligible for Medicaid benefits to help pay her nursing home costs.
John and Suzan can decide how to allocate the spend-down funds and which accounts they’ll tap; the remaining money will belong to John. The couple must keep in mind that when they’re spending down the money, Medicaid won’t let them gift to family or friends.
Sarah Schwarcz is Business Development Representative and staff writer at Senior Planning Services, an industry leader in guiding seniors and their families through the Medicaid maze.