Recently, the state of New Jersey adjusted the figures used to calculate the Medicaid spousal income allowance. Medicaid is a health payment plan for needy individuals. In order to qualify for Medicaid benefits, an individual must have very limited assets (typically less than $2,000) and insufficient income to pay for her care.
Unlike private health insurance plans and Medicare, the Medicaid program will pay for long-term care costs, such as care in a nursing facility or an assisted living residence. Since the cost of long-term care can range from $6,000 to $14,000 per month, many people who never thought they would—or who wanted to—qualify for Medicaid benefits seek to qualify for Medicaid when they require long-term care.
When one member of a married couple seeks to qualify for Medicaid, the spouse who requires long-term care is called the “Institutionalized spouse” in Medicaid parlance. The spouse who does not require long-term care is called the “community spouse.”
When assessing the institutionalized spouse’s eligibility for Medicaid benefits, all of the assets that the institutionalized spouse or the community spouse owns is counted against the eligibility of the institutionalized spouse. Most people believe that only the assets titled in the name of the institutionalized spouse count against her eligibility for Medicaid benefits, but this is untrue. All of the assets owned by either member of the couple count against her eligibility for Medicaid.
Certain assets are non-countable or exempt. The house, a car, personal goods and household effects are all non-countable assets that the community spouse can retain without affecting the eligibility of the institutionalized spouse. The institutionalized spouse also can retain a certain amount of the countable assets (such as bank accounts, cash, stocks, bonds, annuities, IRAs, 401ks, etc.). The maximum amount of countable assets that the community spouse can retain is $126,420.
The $126,420 in countable assets is a maximum. The community spouse can only retain the maximum amount of countable resource if the couple owned countable resources equal to or in excess of $126,420 times 2, or $252,840. If the couple has less than $252,840, then the community spouse can only retain half the countable resources. For instance, if the couple had countable resources of $200,000, then the community spouse can only retain $100,000. If the couple had countable assets of $100,000, then the community spouse can only retain $50,000. And so on.
Many people believe that the community spouse can retain half the countable resources no matter the value of the total countable assets that the couple owns. This is untrue.
The community spouse may also be able to retain a certain amount of the institutionalized spouse’s income. Typically, when a person is a beneficiary of Medicaid and resides in a nursing home, all of her income is owed to the facility every month except for a $50 personal needs allowance and the amount needed to pay her private health insurance premium.
When there is a community spouse, the community spouse may be entitled to some of the institutionalized spouse’s income. The community spouse is entitled to a basic allowance of $2,113.75. Whatever income the community spouse has reduces her basic allowance. So, for instance, if the community spouse received $1,000 in her own Social Security income, then he could only retain $1,113.75 of the community spouse’s income as his basic allowance.
The community spouse is also entitled to an excess shelter allowance for any shelter expenses (utilities, mortgage, real estate taxes, homeowner’s association fee) that exceed $634.14 per month. So, if the shelter expenses were $1,034.14 per month, then the community spouse could also retain $400 as an excess shelter expense.
The remainder of the institutionalized spouse’s income (after the $50 personal needs allowance and health insurance premium) is owed to the nursing facility every month.