by Chadwicke L. Groover, Attorney at Law, Upstate Elder Law, PA
Will I lose everything, if my spouse goes into a nursing home? This question looms large in the minds of far too many seniors. Prior to the passage of the Medicare Catastrophic Coverage Act (MCCA) in 1989, the answer would have been a resounding YES. But now there are protections in place for a healthy spouse, when Medicaid is the primary payer for long term care for an unhealthy spouse.
The Medicaid regulations refer to the healthy spouse as the “Community Spouse” and the spouse needing Medicaid for long term care as the “Institutional Spouse.” In South Carolina, the Department of Health and Human Services (SCDHHS) administers the Medicaid program. Where there is a community spouse, SCDHHS will take into consideration both the married couple’s income and the resources they have available to pay for services.
For the income equation, the Medicaid regulations allow the community spouse to keep all his or her monthly income from whatever sources and regardless of the amount. If the community spouse’s income does not exceed the Minimum Monthly Maintenance Needs Allowance (MMMNA) of $2,980.50, the community spouse will be given enough of the institutional spouse’s income to reach the MMMNA.
For example: John and Brenda have a joint income of $3,500 a month, $2,500 of which is John’s income from Social Security and a pension and $1,000 is Brenda’s income from Social Security. John suffers a stroke and needs to be placed into skilled nursing facility. Because the couple doesn’t have the resources to pay for his care, they apply to the SCDHHS for Medicaid. Since South Carolina’s MMMNA is $2,980.50, Brenda will receive her $1,000 of monthly income plus SCDHHS will allocate $1,980.50 of John’s monthly income to Brenda for her support. Since John also may keep $30 per month for his personal needs, John would pay the nursing home $489.50 a month ($2,500 – $1,980.50 – $30 = $489.50).
The SCDHHS will also look at resources the couple has available to pay for nursing care before the couple will qualify for Medicaid. There are certain assets which are considered exempt and as such are unavailable.
The exempt re-sources are:
- A primary residence in which the community spouse lives
- A vehicle of any reasonable value
- The community spouse’s IRAs
- The institutional spouse’s IRAs, if they are in payout status (i.e. annuitized)
- Actuarily sound annuities
- Actuarily sound promissory notes
- Non-refundable pre-need funeral policies for the couple
- Two cemetery plots
- Life insurance policies with a collective face value of less than $10,000
After the SCDHHS calculates the available resources they then apply a Community Spouse Resource Allowance (CSRA). In South Carolina, the CSRA is $66,480. That means that the community spouse may keep up to $66,480 of the otherwise countable resources. The institutional spouse may keep no more than $2,000 of the countable resources.
For example: In addition to their exempt resources (listed above), John and Brenda have $150,000 in mutual funds and$30,000 in a money market account. Due to the CSRA, Brenda is permitted to keep $66,480 of the $180,000 in available resources. John is also allowed to keep $2,000 for his basic needs. After application of the CSRA, the couple has $111,520 which must be spent down before John qualifies for Medicaid ($180,000-$66,480-$2,000=$111,520).
The good news is that a community spouse will not lose everything when his or her spouse needs institutional care. While the Medicaid rules no longer require the impoverishment of the community spouse, determining which assets are available and which are exempt is complicated. Also, properly calculating the MMMNA and CSRA is critical to providing sufficient income and assets for the community spouse. Any couple facing the need for institutional care for one of them should immediately schedule an appointment with a qualified elder law attorney to assist them with qualifying and applying for Medicaid.