KEEPING THE HOUSE WHEN YOUR SPOUSE GOES ON MEDICAID
Navigating the world of long-term care planning can be daunting. Many elderly couples get overwhelmed trying to figure out how to maintain financial stability while simultaneously caring for their loved one.
A big concern many of our clients have is, “If my spouse needs to go on Medicaid, can I still stay in our house?” For many couples, their house is their biggest asset and the thought of losing it can be devastating. But there is good news - yes, there are ways to protect and stay in your home while also ensuring your loved one receives the care they need. In this blog post, we will explore Medicaid’s spousal impoverishment rules and how they can protect families from foreclosure.
Understand Medicaid Eligibility Requirements
Medicaid is the primary payer of long-term care services in the United States. However, it also has strict eligibility requirements. Without proper planning, you may be required to substantially reduce or nearly exhaust your financial resources before meeting Medicaid’s strict financial qualifications.
The rules governing Medicaid in Ohio are extremely complex and have undergone many changes over the past few years. The Ohio Department of Health outlines a basic list of income requirements for Medicaid eligibility here. Please keep in mind that this list is not exhaustive and requirements change every year.
If you or your spouse are likely to need long-term care in the future, the time to plan is now. Many people applying for Medicaid believe they can give their assets away to family members and instantly qualify for benefits. This is not the case. Giving away assets improperly can result in the denial of Medicaid benefits for some time.
When you apply for Medicaid, the county Jobs and Family Services Department will require you to provide bank statements and other financial records from five years prior. This is known as the “lookback period”. You will be required to explain any transaction that appears to be an improper transfer.
Medicaid also limits the assets the spouse of an applicant can have, but not income. The spouse can still work and not have to contribute to the cost of long-term care.
What Happens to the Community Spouse
As the community spouse (the healthy spouse not applying for Medicaid), you are allowed to stay in the house until you either need long-term care or pass away. In most cases, the community spouse will also be allowed to retain a portion of the couple’s shared assets and income. This is known as spousal impoverishment protection.
What are Spousal Impoverishment Rules?
Spousal Impoverishment Rules are federal Medicaid regulations that are intended to prevent non-applicant spouses from becoming poverty-stricken. These rules include a Minimum Monthly Maintenance Needs Allowance (MMMNA) and a Community Spouse Resource Allowance (CSRA) that protect a portion of a couple’s income and assets, including the home, for the non-applicant spouse.
The MMMNA is the minimum amount of monthly income to which the community spouse is entitled. Due to this rule, the applicant spouse can transfer a portion of their monthly income to the non-applicant spouse as a Spousal Income Allowance.
While a Medicaid applicant is generally limited to $2,000 in assets, the CSRA allows the community spouse to retain a much higher amount of the couple’s assets. The CRSA protects a portion of the couple’s assets for the community spouse. Some assets are not counted towards the asset limit; they are exempt. Exemptions generally include the couple’s primary home, household items and personal items (like furniture, clothes and jewelry), and a motor vehicle.
What Happens to The House After My Spouse and I Pass Away?
While a house may be protected from Medicaid during a recipient's lifetime, it becomes vulnerable after both spouses pass away. Medicaid has a right to place a lien on the house via the Estate Recovery Program. Essentially, Medicaid will make a claim against the estate, including the home, to cover the costs of services provided during the recipient's lifetime. Unfortunately, this means that your family may have to sell the house and settle the claim before they receive an inheritance.
Careful planning with a Medicaid attorney can help protect your home from estate recovery, and ensure that your home stays in the family.
How Can I Keep Medicaid from Taking My Home After I Die?
There are a few options for protecting your home from Medicaid estate recovery after you pass away. A qualified Medicaid attorney can help create an estate plan that includes one or more of the following tools:
If Long-Term Care Will Be Needed in The Future
An Irrevocable Medicaid Trust. The goal of this strategy is to transfer certain assets out of your name and into the trust so they will not be counted for Medicaid purposes. This strategy better protects your assets than simply giving them to your children outright. You can set your children up as beneficiaries of the trust and include language in the document that determines when and how they will obtain trust assets.
Home Ownership Transfer. There are strict rules that govern these types of transfers and there may be adverse tax implications. It is important to consult with an experienced Medicaid attorney before taking action.
Gift and Medicaid-Compliant Annuity. This strategy requires dividing your assets into two shares: the “Gifted Share” and the “Medicaid-Compliant Annuity Share”. The gifted share is usually given to your children and the other half is used to purchase a special annuity that is not counted as an asset for Medicaid purposes. This annuity provides a monthly stream of income that can be used to pay for long-term care during the penalty period created by gifting.
Navigating the complexities of Medicaid and long-term care planning can be daunting, but you don't have to do it alone. A knowledgeable Medicaid attorney can provide valuable guidance, helping you create a comprehensive plan that protects your assets, ensures your eligibility for benefits, and safeguards your home for future generations. Don't let confusion or uncertainty hinder your Medicaid planning. Take the first step towards securing your future today by calling 614-389-9711 and scheduling an appointment.
Want to learn more about long-term care and Medicaid? Download our Aging with Confidence Guide here.
About the Author
Having earned her law degree in 1997, Laura Blumenstiel has nearly three decades of legal experience. She is deeply committed to providing compassionate and effective legal services for our clients. Each day, she finds fulfillment in meeting with clients and meticulously crafting trusts and estate planning documents. Additionally, she works diligently on estate administration through probate court proceedings. She's passionate about helping individuals and families plan for the future and guiding them through the probate process during difficult times. She strives to make a genuine connection with all her clients.