As noted in my last post about the Michigan Medicaid Assets Declaration form, the spouse of a nursing home resident (called the community spouse) can keep all of the couple's countable assets if they do not exceed $22,728. If the couple's countable assets exceed $22,729, the community spouse can keep an amount equal to half of the countable assets, but no more than $113,640, without further action. The amount of countable assets the community spouse can keep is called the protected spousal amount. For example, if a married couple has a home and $150,000 in the bank, the community spouse would be able to keep the home, because it's an excluded or non-countable asset, and $75,000 of the $150,000 as the protected spousal amount. The nursing home spouse would be able to keep $2,000 of the $150,000. This leaves $73,000 of the bank account funds at risk and that either has to be spent down on the nursing home spouse's care before the nursing home spouse will qualify for Medicaid or otherwise protected.
It should be noted that some people may feel that the community spouse being able to keep half of the countable assets (but again, this is capped at $113,640) is a good enough result. After all, the community spouse will have his or her own Social Security and pension income to live on as well as the protected spousal amount. However, what should able be considered is that the community spouse will continue to have most of the same living expenses, but may lose all or part of the nursing home spouse's income to help pay them. The only bill that tends to go down when one spouse moves to the nursing home is the grocery bill, but all the other bills remain the same (utilities, real estate taxes, home maintenance, insurance, etc.). Since all or part of the nursing home spouse's income needs to be paid to the nursing home as a sort of co-pay, referred to as the patient pay amount), the community spouse will have to be able to cover all the bills with his or her own income. Moreover, in addition to having to pay the $7,000+ monthly nursing home bill, once the nursing home spouse moves to the nursing home, their medication bills tend to increase, sometimes dramatically, and extra charges are incurred in the nursing home for expenses such as wheelchair rental, laundry, incontinence, care, and cable T.V. for the nursing home spouse. These extra expenses will all need to be paid by the community spouse out of his or her income or the couple's medical expenses.
Even more significantly, I encourage people to look ahead and consider the community spouse's future needs. The community spouse may need home health care, may have high medication bills, and may need to move to assisted living someday. If half the countable assets have been spent down in a few months on the nursing home spouse's care, there may be an inadequate pool of resources to pay for the community spouse's future care needs. For instance, if the community spouse needs to move to an assisted living facility that charges $5,000 per month and she has a Social Security income of $1,000 a month, the $4,000 monthly shortfall must be covered from assets. In addition, after one spouse passes away, the income will drop because only one Social Security income will be received and, in many cases, the amount the surviving spouse can receive from the deceased spouse's pension is less, or is eliminated entirely. These are two important reasons why it makes sense to preserve more assets for the community spouse above the Department of Human Services' default protected spousal amount. So how do you do that?
One option is to go to court and ask the judge to increase the protected spousal amount. This has been a long-standing protection contained in Medicaid law for spouses of nursing home residents. The reason this protection exists is Congress recognized that application of the default protected spousal amount may not be appropriate in all circumstances so they created an option for a local judge to review an individual's specific situation to see if the protected spousal amount should be increased.
Consider again the hypothetical example of Larry and Ruth. After Larry suffered a series of strokes, requiring many years of home care, his wife Ruth and their daughter, Jennifer, reluctantly concluded that his care needs could best be met in a nursing home. Larry and Ruth have $300,000 in countable assets, so without further action, Ruth could keep $113,640, Larry could keep $2,000, and the remaining $184,360 would have to be spent down on Larry's care before he would qualify for Medicaid. One of the reasons that Larry needs could no longer be met at home is that Ruth herself is having some health problems, including periods of confusion and forgetfulness. Jennifer has not wanted to discuss it with Ruth yet, but she is concerned she may be too frail to live at home much longer and thinks assisted living is an option they can explore. Unfortunately, in Michigan assisted living is not paid for by Medicaid, so in order for it to be a good long-term option for Ruth, she needs enough income and a large pool of resources to pay for it.
After Larry moves to the nursing home, Ruth and Jennifer consult with me, an Elder Law attorney. I advise them of the default options above but that Ruth could also seek an order in court increasing the protected spousal amount. In some cases, the judge may award all of the countable assets to Ruth, so she may be able to keep all of the $300,000. Instead of a large bulk of Larry and Ruth's savings being depleted in a short time by his high care costs, an additional pool of resources would be saved to meet Ruth's needs, including home care for her or assisted living care in the future. I tell Ruth that this is not a divorce or legal separation, and the court action will not alter their marital relationship at all. This is an important note because sadly, in the past, some married couples have been advised to get a divorce by inexperienced attorneys and general practice attorneys who dabble in Medicaid. There is no reason for such an extreme action with the other protections afforded to community spouses under Michigan's Medicaid rules. Ruth and Jennifer are glad to hear this is nothing like a divorce or legal separation, but Jennifer wonders if this will be a long-drawn out legal preceding that will take months. It is true that we will need to present a detailed case to the judge to convince the judge to increase the protected spousal amount, including detailing Ruth's financial needs and a budget, but in my experience, increasing the protected spousal amount can usually be accomplished with one court appearance.
Ruth and Jennifer wonder why this option was not mentioned on the state's website or in any of the documents the state hands out. My response is that the government will only tell you what you can't do, not what you can do. Expecting the government to protect your assets is number 7 in my list of the Top 9 mistakes people make with Medicaid qualification.
It should be noted that in general, the Department of Human Services will not advise you that this is an option and you will need an Elder Law attorney who is experienced in Medicaid planning to do it. Ruth and Jennifer are glad to hear about this option and decide to pursue it. After a detailed, written legal argument is prepared and submitted to the court, a hearing is scheduled on Ruth's request to increase the protected spousal amount. At the hearing, the judge grants the request and Ruth is allowed to keep all of the countable asses while Larry qualifies for Medicaid. 16 months later, Jennifer advises that Ruth has moved to assisted living. She is adjusting well and enjoys the activities and being around other people. While the $5,000 monthly cost is expensive, Jennifer thinks they will be able to pay for Ruth's care for the rest of her life out of the other assets that were protected.
This is just one additional protection afforded to the community spouses of nursing home residents and it illustrates the need to look ahead and consider the community spouse's future needs and the help that an elder care attorney who is experienced in Medicaid qualification can provide. In future posts, I'll discuss other protections contained in the law for community spouses.