When one spouse requires long-term care, many married couples worry that qualifying for Medicaid will mean losing most of their savings and financial security. Fortunately, Medicaid rules contain special provisions designed to protect healthy spouses from becoming impoverished when their husband or wife needs nursing home care. Understanding these unique Medicaid planning considerations can help couples make informed decisions before a crisis occurs.
Unlike single applicants, married couples may benefit from spousal impoverishment protections. These rules allow the community spouse to retain certain assets and income while the other spouse seeks Medicaid eligibility. The goal is to prevent the healthy spouse from being left without sufficient resources to maintain a reasonable standard of living.
Playing the numbers game to a couple’s advantage
Medicaid generally limits the amount of countable assets an applicant may own, but not all assets are treated the same way. Certain property may be exempt, and the community spouse may be allowed to retain a portion of the couple’s resources under federal and state guidelines.
In some situations, the community spouse may be entitled to retain a portion of the institutionalized spouse’s income if necessary to meet living expenses. These rules can be especially valuable when one spouse relied heavily on the other’s income before long-term care became necessary.
Unfortunately, gifts or asset transfers made without proper planning may trigger penalties that delay eligibility. Well-intentioned transfers to children or other relatives can create significant problems if they occur within the look-back period.
Because Medicaid rules are complex and frequently change, spouses should avoid making assumptions based on advice from friends or online sources. Every family’s financial situation is different, and strategies that work for one couple may not be appropriate for another. Thankfully, careful, personalized planning today may help protect a family’s resources tomorrow.