The new Medicaid spousal impoverishment figures have been published, so I thought I’d take this opportunity to review the meaning of the figures. Many people would be surprised by the generosity of the Medicaid program when dealing with a married couple.
Medicaid is a health payment plan for needy individuals. If a person qualifies for Medicaid, Medicaid will pay for a person’s long-term care needs, such as care in a nursing home or an assisted living residence.
In order to qualify for Medicaid, a person must have a limited amount of resources and insufficient income to pay for his care. When an applicant for Medicaid is married, his spouse—called the Community Spouse in Medicaid parlance—can retain a certain amount of assets.
The Community Spouse can retain the home irrespective of the value of the home. So, theoretically, a spouse could live in a million-dollar home and the home would be exempt. I have applied for Medicaid for thousands of people, and I can tell you that I have never had a couple with a million-dollar home. But, theoretically, the Community Spouse could retain such a home.
In addition, the Community Spouse could retain a car irrespective of value when there is a Community Spouse. Finally, she can retain all of the household goods and effects in the home.
The home, a car, and the personal goods are all non-countable resources. The Community Spouse can retain the non-countable resources without question.
The Community Spouse can also retain a certain amount of the countable resources, such as cash, stocks, bonds, annuities, IRAs, etc. The countable assets that either spouse owns are countable resources, so it doesn’t matter if the countable resource is titled in the name of the husband or the wife. All countable resources count against the husband’s eligibility for Medicaid.
This is where the “spousal impoverishment figures” come into play. The spousal impoverishment figures typically change every year with inflation. These figures determine how much of the couple’s countable resources the Community Spouse can retain.
In 2017, the Community Spouse can retain a maximum of $120,900 of the couple’s countable resources. The Community Spouse can retain a minimum of $24,180 of the couple’s countable resources.
What this means is best illustrated by way of example. Assume that Mr. Smith and Mrs. Smith own a home, a car, and $300,000 of cash/stocks/bonds. Mr. Smith enters a nursing home. Mrs. Smith can retain the home, a car, and $120,900 of the cash/stocks/bonds. Since the Smiths own more than twice the maximum amount of countable resources ($120,900 * 2 = $241,800), Mrs. Smith can retain the maximum amount of countable resources that a Community Spouse can retain, or $120,900.
If the Smiths owned $200,000 of cash/stocks/bonds, then Mrs. Smith could retain $100,000 of countable resources, plus the home and car. Since the Smith’s total countable resources ($200,000) are less than two times the maximum amount of countable resources ($241,800), Mrs. Smith can only retain $100,000.
If the Smiths owned $100,000, then Mrs. Smith could retain $50,000. If the Smiths owned $50,000, then Mrs. Smith could retain $25,000. If the Smiths owned $25,000, then Mrs. Smith could retain the minimum amount of countable resources, or $24,180.
As stated, Mrs. Smith can always retain the non-countable resources—the home, the car, and the household goods. So, when dealing with a married couple, Medicaid, which many people call a “welfare program,” can be quite generous. With additional planning, Mrs. Smith could retain far more assets than many people would ever believe, often all of the couple’s assets.