As couples age, one spouse or partner may require nursing home care due to their health condition. Unfortunately, due to the steadily rising cost of nursing home care, couples can easily drain their savings paying for one spouse’s care. Home care and nursing home planning can help married couples preserve their assets when one spouse requires long-term care. The good news is that couples may have various options for planning for one spouse’s nursing home care, especially when they plan early.
Understanding Medicaid and Long-Term Care Costs
In Pennsylvania, living in a nursing home can cost more than $10,000 per month. As a result, many seniors turn to Medicaid to help cover the cost of nursing home care. However, Medicaid has strict income and asset limits that control eligibility for benefits. A senior who applies for Medicaid must receive a monthly income and own assets below these limits. A married senior will have different limits that account for their spouse’s income and assets. Unfortunately, many seniors will exceed these limits without careful financial and legal planning.
Community Spouse Protections Under Medicaid** **
Legal strategies for qualifying for Medicaid benefits for a spouse who needs nursing home care may involve utilizing community spouse protections under Medicaid rules. Medicaid regulations distinguish between the “institutionalized spouse” (the spouse living in a nursing home) and the “community spouse” (the spouse remaining in the couple’s home). Medicaid has several “spousal impoverishment” protections, including the Community Spouse Resource Allowance and the Minimum Monthly Maintenance Needs Allowance. These protections can exempt some of the community spouse’s or institutionalized spouse’s income from the eligibility limits, ensuring that the community spouse has sufficient financial resources to afford their living expenses.
Legal Strategies to Protect Savings
Medicaid and long-term care planning can involve various strategies to help couples qualify for benefits and protect their savings. Some of the most common methods include:
- Spending-Down Strategies – Medicaid rules allow couples to spend assets on eligible expenses without those assets counting under Medicaid’s five-year lookback period.
- Gifting and Asset Transfers – Couples can also provide gifts or transfer assets to family members to get under Medicaid’s asset limits. However, transfers that occur within the five years before a spouse applies for Medicaid may trigger penalties that can delay receiving benefits.
- Medicaid-Compliant Annuities – A couple can convert assets into a Medicaid-compliant annuity that provides exempt income for a community spouse.
- Irrevocable Trusts – Medicaid trusts can also help couples get under the asset limits for benefits.
- Repositioning Wealth – Couples can convert countable assets into exempt ones, such as using some wealth to purchase a primary residence or household vehicle.
The Importance of Planning Early
The sooner couples start planning for one spouse needing nursing home or long-term care, the more options they may have. Due to Medicaid’s five-year lookback rule, specific strategies may become unavailable since they would not help a couple qualify for benefits, as they can trigger penalties that delay eligibility. However, even when a spouse suddenly needs nursing home care, specific strategies can still help couples protect assets from the high costs of long-term care.
Due to the complexity of Medicaid regulations and the fact that Congress and federal agencies frequently update rules, having legal counsel to assist with legal and financial planning can help avoid mistakes that can disqualify them from Medicaid or impose penalties that delay benefits.
Contact an Estate Planning Attorney Today
If your spouse needs or may need nursing home care, developing a comprehensive legal and financial strategy can help you protect your assets and retirement savings. Contact Kreisher Marshall & Associates, LLC, today for a confidential consultation with an estate planning lawyer to discuss your options for preserving your wealth before your spouse goes into a nursing home.