PROTECTING THE SPOUSE OF A NURSING HOME RESIDENT

One of the biggest mistakes that many spouses make when the other spouse enters a nursing home is the failure to get legal advice from an elder law attorney about Medicaid, known in Massachusetts as ?MassHealth.? ?Often, the spouse remaining in the home (referred to as the ?community spouse?) relies on unreliable information which can turn out to be financially devastating.

The MassHealth rules have been designed to protect certain income and assets for the community spouse without affecting the nursing home spouse?s eligibility for long-term care benefits.? These so-called ?spousal protections? ensure that the community spouse has the minimum support needed to continue to live in the community.?? However, the amounts that are protected are quite modest and can even be inadequate to sustain the at-home spouse?s accustomed standard of living.

ASSETS

Generally, the community spouse is entitled to keep a maximum of $109,560 (2011 figure), excluding the value of the home and car, which is referred to as the community spouse resource allowance (CSRA). This amount is not affected whether the assets are jointly held by the couple or they are all in the name of the nursing home spouse.??? MassHealth totals the countable assets of both the community spouse and the nursing home spouse as of the date of ?institutionalization,? the day in which the nursing home spouse enters either a hospital or a long-term care facility in which he or she stays for at least 30 days.? The nursing home spouse becomes eligible for MassHealth when the combined assets for both spouses equal the CSRA plus the $2,000 the nursing home spouse is allowed to keep.? For example, if a couple owns $200,000 in countable assets on the date the MassHealth applicant enters a nursing home, the applicant will be eligible for MassHealth once the couple?s assets have been reduced to a combined figure of $111,560 ? $2,000 for the applicant and $109,560 for the community spouse.? The remaining assets must then be depleted in order to qualify the nursing home spouse for MassHealth long-term care services.

The Probate Court or MassHealth, under certain circumstances, may permit the community spouse to retain more than the maximum protected amount.? For example, if the needs of the community spouse are greater than the minimum income level per month he or she is allowed to keep, the community spouse can petition for an increase in the CSRA so that additional funds can be invested in order to generate income to make up the shortfall.? The low-income community spouse would then be able to retain a substantial level of savings above $109,560, while maintaining eligibility for the nursing home spouse.

The community spouse can also employ certain financial planning strategies to preserve assets in excess of the CSRA.? ?One means of protecting excess assets is through the purchase of an annuity.? Purchasing an annuity transforms excess assets that would otherwise make the nursing home spouse ineligible for MassHealth into a noncountable stream of income for the community spouse.? The annuity must meet the following requirements: (1) it must be irrevocable; (2) the term of the annuity must have a guaranteed number of years of payment equal or less than the community spouse?s life expectancy; and the (3) the money paid back by the annuity must be equal to or greater than the annuity?s purchase price.? The annuity should also allow for a change in beneficiaries in the event the community spouse later needs nursing home care.? Lastly, the annuity should not be purchased until the spouse enters the nursing home.

INCOME

Although the amount of assets a community spouse is entitled to keep is strictly limited, his or her income will continue undisturbed.? The community spouse will not have to use his or her income to support the nursing home spouse receiving MassHealth benefits.? ??Further, if the community spouse?s assets increase after the institutionalized spouse is approved for MassHealth benefits, the community spouse will not be required to spend down those excess assets on the institutionalized spouse?s care.

In some cases, the community spouse may be entitled to some or all of the monthly income of the nursing home spouse.? The amount the community spouse is allowed to keep depends on what MassHealth determines to be a minimum income level for the community spouse, known as the Minimum Monthly Maintenance Needs Allowance (MMMNA).? The MMMNA is calculated for each community spouse according to a complicated formula based on his or her housing and other costs.? The MMMNA may range from a low of $1,821.50 to a high of $2,739 a month (2011 figures).? The community spouse may seek an increase in his or her MMMNA either by showing hardship or by obtaining a court order of spousal support.? If the community spouse?s income falls below his or her MMMNA, the shortfall is made up from the nursing home spouse?s income.

For example, Mr. and Mrs. Smith have a joint income of $3,000 a month, $1,700 of which is in Mr. Smith?s name and $700 is in Mrs. Smith?s name.? Mr. Smith enters a nursing home and applies for MassHealth.? Suppose MassHealth determines that Mrs. Smith?s MMMNA is $2,000 (based on her housing costs). Since Mrs. Smith?s own income is only $700 a month, MassHealth allocates $1,300 of Mr. Smith?s income to her support.? Since Mr. Smith may also keep a $72.80 a month personal needs allowance, his obligation to pay the nursing home is only $327.20 a month ($1,700 ? $1,300 ? $72.80 = $327.20).

The MassHealth rules are often complex and confusing.? Further, nothing in this field is absolutely certain or insulated from further legal or policy change.? The Law Office of Stephanie Konarski can help guide you through the multifaceted MassHealth maze to protect assets for the spouse and other family members.

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Tags: asset protection, attorney stephanie konarski, Massachusetts elder law attorney, masshealth, Medicaid, nursing home

Source: http://massestatelawyer.com/blog/elder-law/protecting-spouse-nursing-home-resident/

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