Medicaid qualification is full of its own jargon that can make the process a mystery to almost anyone. One key concept to understand is the “community spouse resource allowance.” To speak in the jargon of Medicaid for a moment, the community spouse resource allowance is the value of non-exempt assets that a married couple is permitted to keep and still qualify for Medicaid long-term care assistance. That definition is quite a mouthful, so I will break it all down and put it into context.
When one member of a married couple requires long-term care for more than 30 days, an inventory of the couple’s assets as of the day the institutionalized spouse first entered the hospital or nursing home must be prepared. This is done using form DHS 4574-B, the Asset Declaration. This form must accurately describe a couple’s assets, under penalty of law. From this form, a determination is made of how much the couple will be permitted to keep and qualify for Medicaid. Eventually, assets that are retained by the couple will have to be separately titled in the name of the spouse who is not institutionalized. That spouse is called the community spouse. Therefore, the amount the couple can keep is called the community spouse resource allowance. “Resource” means basically the same thing as “asset” for most purposes. The process of dividing assets between what must be spent down and what the community spouse may keep is referred to as the division of assets. Generally speaking, the community spouse will be permitted to keep one half of all countable assets, but no less than $20,800.00 and no more than $104,400.00.
To take an example, let’s suppose that Bob and Mary have a house worth $150,000.00 and a car worth $8,000.00 and $150,000.00 in the bank on the day that Bob goes into the nursing home. Bob and Mary’s asset declaration might look like this:
Bank Account $150,000.00
At first glance, it appears that this couple is entitled to take retain the full $104,400.00 since they have $308,000.00 in net worth. But remember that the community spouse resource allowance only concerns non-exempt assets. The car and the house are exempt assets and so they do not count in the determination of what the couple may keep. But by the same token, the car and the house are not subject to spend-down. Here, the couple will only be entitled to keep $75,000.00 of the $150,000.00 in money that they have in the bank. The remaining $75,000.00 is the amount that is subject to spend-down. This money must be devoted to specific purposes under law, most commonly the cost of nursing home care. However, there are significant ways to put this money to the best use for the sake of the community spouse that will help to secure a retirement, care for the community spouse, or meet a number of other needs that the family may be facing. This is one area where consultation with an experienced elder law attorney can be particularly helpful.
For a free guide to Medicaid Planning and Division of Assets, send an email to Jerrold Bartholomew.