In my last blog, I wrote about one of the protections contained in Michigan's Medicaid rules for married couples: the ability to seek an order in probate court increasing the protected spousal amount. By doing that the spouse who is living at home, called the community spouse, may be able to keep more than the default one-half (capped at $113,640) of the couples countable assets where there spouse is a nursing home resident.
What if the couple has already spent down to the protected spousal amount and there are no remaining assets left to protect? This can happen when the community spouse or their family does not seek advice on Michigan's Medicaid laws and just submits a Medicaid application on their own. In certain circumstances, there may be steps we can take to provide financial relief to the community spouse.
Consider the hypothetical case of a married couple, Marvin and June, who have been married for 55 years. June, age 82, has been a nursing home resident for 2 years. Among many age-related health problems, she has dementia and spinal stenosis. Marvin cared for her at home for as long as he could until his diabetes made it difficult for him to walk and his limited vision resulted in him having to give up driving. Without being able to take June to the doctor or attend to her needs at home, it simply was not a safe situation for her to remain at home any longer and, after June was hospitalized for a bladder infection, her doctor advised Marvin that he really should admit her to a nursing home so that she could receive the round-the-clock care professional care that she needed.
Marvin was concerned about June and about the $6,500 monthly cost of the nursing home. His pension and Social Security totaled $2,800 per month. June received $1,100 from Social Security and a small pension of $250 per month. While their income totaled $4,150 per month and had provided a nice retirement, with a $6,500 monthly nursing home bill, they had a monthly shortfall of $2,350 that Marvin would have to cover from their savings, unless June could qualify for Medicaid. Marvin and June owned their home and had about $100,000, but Marvin wondered if he would be able to make ends meet with his high medical and medication bills and June's $6,500 nursing home bill.
Marvin spoke with his daughter Linda and her husband Rick about what to do. Marvin asked Linda if they should speak to an elder care attorney. Marvin had met a lady at the nursing home whose husband was a resident there and she said the attorney had helped them with the Medicaid application process. Linda said that might be a good idea and suggested speaking with the social worker at the nursing home about the Medicaid program too.
Rick, who had been an engineer with one of the big three auto companies until he took an early retirement package in 2007, interrupted Linda, and said not to bother. Rick had always fancied himself as a financial expert and said he had read an article on the state's website that said you can't qualify for Medicaid until you spend down to $2,000, so there was no point in talking to an attorney. Later, Rick went and downloaded a Medicaid application and filled out himself. He listed Marvin and June's $100,000 in savings on the application and told Marvin to sign it. Marvin wondered if it was the right thing to do without speaking with the elder law attorney, but Rick said it would be a waste of money to pay some attorney to give advice about Medicaid. Marvin went ahead and signed it thinking, Rick was always talking about the financial ideas he read about, so he hoped that Rick knew what he is talking about with Medicaid.
Rick submitted the application and a month and a half later, Marvin received a letter from the Department of Human Services. It indicated June was not eligible for Medicaid until they had spent down $48,000 of their savings. Marvin got to keep $50,000 as the protected spousal amount and June got to keep $2,000. Linda started helping Marvin pay his bills, and each month she wrote a check to the nursing home. She also wrote checks to the home care company she had to hire to help with Marvin's increasing care needs after Marvin had to have a foot amputated due to the diabetes. He now needed a home health aide to help him in the shower, manage his medication, and with other care needs around the home. At $25.00 per hour, the home care bill, nursing home bill, medical and prescription drug co-pays, and usual household expenses used up the $48,000 quickly and also ate into Marvin's $50,000 protected spousal amount. While Medicaid started paying for June's care after the $48,000 was spent down, it was not long before Marvin did not have much left from his $50,000 protected spousal amount and Linda wondered how she would be able to continue to pay his home health care costs.
At this point, Linda decided to see me, the elder law attorney. After I listened to her story, I told her it was too late to increase the protected spousal amount as I previously described here. The $48,000 had already been spent, so there was no amount in excess of the $50,000 protected spousal amount left to protect. Linda regretted listening to Rick, who was such a financial know-it all. In addition to screwing up Marvin and June's Medicaid satiation, he had also lost half of the early retirement package by day trading stocks on the internet. Linda asked if there is anything that could still be done to help pay for Marvin's increasing home care costs. I said there is: we could go to court and seek an order increasing the community spouse income allowance.
The following describes how that works: typically, all of the nursing home spouse's income is paid to the nursing home as a sort of co-pay called the patient pay amount. June has been able to keep $60 per month from her $1,100 Social Security and $250 pension, and the rest has been paid to the nursing home each month as the patient pay amount, with Medicaid then paying the rest of the bill. Since Marvin had his own income of $2,800 per month, he was not able to keep any of June's income under Medicaid's default rules; the default rules are applied if you just submit the application yourself or with the help of the social workers at the nursing home (or with the help of your know-it-all son-in-law, which was the case here).
However, Michigan's Medicaid regulations also have another rule that a judge can award some or all of the nursing home spouse's income to the community spouse. After all, application of the default rules may not make sense in all cases, so Congress provided a mechanism in the law for a local judge to review a couple's individual situation and, if the judge thinks it is appropriate, the judge can award the nursing home spouse's income to the community spouse, effectively reducing or eliminating the patient pay amount.
I suggest that Marvin file a request to increase the community spouse income allowance. The reason for it would be that Marvin needs June's income to pay for home care, along with his income, so that he too does not end up in a nursing home and having to apply for Medicaid. A detailed written argument will need to be prepared and submitted to the court and there will also need to be a hearing. Since Marvin has a real need for June's income to pay for his home care and other medical expenses, there is an excellent chance the judge will increase the community spouse income allowance above the Medicaid defaults, and allow Marvin to keep June's income instead of paying it to the nursing home as the patient pay amount. Linda asked if this would upset the nursing home. I said no, because the nursing home will be getting paid the overall same amount from Medicaid.
This is an example of the help an elder care attorney can provide to a married couple when one spouse is in the nursing home, even if they have already spent down all or some of their assets above the protected spousal amount.