Medicaid Does Not Require Financial Ruin
• Congress considered and rejected the proposition that elders should be bankrupted by the cost of long term care.
• Congress gave community spouses of the Medicaid nursing home patients special rights to preserve their money and property. A spouse may retain ALL savings and income.
• As with the income tax, the community spouse must hire a professional advisor to secure all credits, deductions and exemptions that Medicaid allows.
To the spouse or or helpful child of a nursing home resident.
I’m Jim Schuster, Certified Elder Law Attorney. This page is for the spouse who has a husband or wife in the nursing home and is worried about financial ruin because of the crushing nursing home bills. Worry no more. We have helped hundreds of families maintain their financial security and get good care in the nursing home. First some news I know you will like:
Spouse in a Michigan nursing home? You can save everything. Period.
“Can I save our house that took 30 years to pay for, our lifetime of savings and our income?”
Yes, your house is at risk from Medicaid Estate Recovery and yes, you can save it. When properly done, Medicaid will pay the nursing home for your spouse and allow you, the community spouse, to save everything for yourself and your family.
A Little Known Federal Law Protects Community Spouses
Back in 1988 Congress passed the Medicare Catastrophic Coverage Act. It allows us to protect you from complete financial ruin. You must hire an attorney to enforce your rights. That is to say there are two problems with the spousal protection law. First, it is not automatic, you must take steps protect yourself. Second, you have to know your rights to protect them! Nobody tells community spouses about the income and asset protection Medicaid allows. Most spouses never learn about their rights and are financially ruined by the staggering cost of nursing homes. You must hire a lawyer who is expert and up to date on Medicaid’s interpretation of your rights. If you don’t take steps to protect yourself, nobody else will.
How can you protect everything you have?
First we advise you of your rights and options, second we work with you to devise a protection plan that works best for you, then we execute your Medicaid asset protection trust, and finally we complete and file the Medicaid application for you. You never have to go to the Medicaid office. You can spend your time taking care of your spouse and yourself.
What are your rights and options?
You have the right to save as much as you want and the option to spend on what you choose. We help you with the savings. As far as spending you can purchase what you want or just what you feel you need. Whatever you wish to save we make it happen.
How does this community spouse protection federal law work?
A single person applying for Medicaid may have no more than $2,000. But if the applicant has a community spouse, he or she will have to spend or protect half or more of their assets. Medicaid allows a spouse half of the assets up to a limit of $137,400 (2022). For example if a couple has $120,000 in total savings, then the CSRA is half or $60,000. That is the maximum “Community Spouse Resource Allowance” (CSRA). So if a couple has $300,000 in “countable assets” the community spouse protected amount is $137,400 since that is the maximum spousal allowance. The total of countable assets over the CSRA must be spent or protected.
On what can I spend the amount over the CSRA?
Anything. Pay off bills, buy a new car, update your home, get a new kitchen – anything. You do not need to use the money on the nursing home, though if you have a nursing home bill you must pay it until your spouse is eligible for Medicaid. Most clients prefer to hold on and protect as much as they can for later years.
What options do you have besides spending? Here is what the law provides:
Court Order Option
You may hire a lawyer and petition the probate court for an order awarding you a greater share of assets than the “CSRA.” The judge could award you all or part of the “excess assets.” The court process is written into the federal Medicaid law and may be undertaken only when there is a Medicaid application. You must hire an elder law attorney since other lawyers don’t know about the law and probate courts don’t see these petitions very often. Judges don’t know what to make of them and the attorney has to explain the law. There is no guarantee the judge will grant your petition. The Order from the court must be presented to the Medicaid Department and the department may appeal the Order.
Annuity Option
You may take the “excess assets” over your CSRA and purchase a single premium immediate annuity. You must cash in investments, CDs etc. and use the cash to buy the annuity. The annuity must be “immediate” and “irrevocable.” It must pay you a monthly income for your life expectancy according to Medicaid tables. The money received may eliminate your income support from your spouse. Your spouse’s income will go to the nursing home instead of to you. You have other options, see the Income section below.
Medicaid Asset Protection Trust for the Community Spouse
For years Michigan recognized the community spouse asset protection trust is called a “sole benefit trust.” It is recognized by the federal “State Medicaid Manual” published by CMS the federal agency that administers the program and the Michigan Supreme Court in the case called Hegadorn v. DHS.
The Community Spouse Right to Income Protection
The income rules of Medicaid are in a way, the opposite of the asset rules. All the couple’s countable assets, including for example the community spouse’s IRA, are considered available to pay the nursing home. However, the spouse’s income is not. The nursing home spouse’s income, minus certain allowances, is paid to the nursing home as his “patient pay amount.”
The income of most community spouses is not sufficient for their needs. This was addressed by Congress in the Medicare Catastrophic Coverage Act of 1988. The community spouse has the right to a Minimum Monthly Maintenance Needs Allowance (MMMNA). In the Michigan Medicaid program this allowance is known as the Community Spouse Income Allowance (CSIA). It is calculated by the Medicaid department to allow the community spouse an income of $2,177.50 minimum to $3,435 maximum per month.
What if you do not have at least $2,177.50 in monthly income? You are allowed to receive a supplement from the income of the nursing home spouse to reach the CSIA. The nursing home spouse’s remaining income goes to the nursing home.
Here’s an example Mr. Smith is in the nursing home and his income is Social Security $1,700 and pension of $800. Mrs. Smith’s Social Security is $700. Under the Medicaid rules her income is $1,477.50 short of the $2,177.50 minimum CSIA. So Medicaid will allow her to have a minimum of $1,477.50 of her husband’s income. What about the rest of his income?
Mr. Smith’s remaining income will be spent as follows. He gets $60 personal needs allowance and funds to pay his health insurance premium such as a Medicare Advantage monthly premium. The rest will go to the nursing home. Can Mrs. Smith get the income that would go to the nursing home? Yes, see below.
The Medicaid rules allow the community spouse an increase above the minimum by contribution from the nursing home spouse’s income. Medicaid considers whether she needs an “excess shelter allowance.” The shelter allowance considers rent, or taxes, insurance or association fees if they own their home or condo, and utilities. Again, the maximum community spouse income allowance is $3,435. That includes her income and the contribution from the nursing home spouse. It takes a court order for anything more.
Increasing the CSIA – Court Order
What if the nursing home spouse’s income is very substantial? The community spouse can hire a lawyer and go to the probate court for an order that additional income be allowed to her (or him). In fact, if the spouse can show need he or she may have the court order all of the income to her or him.
Conclusion
You need not fear financial ruin from nursing home bills. You do not have to give away your property years in advance in contemplation of a long term stay in a nursing home. In fact the opposite is true. You can act after your spouse has entered the nursing home. As a community spouse you have special rights.
These special rights do not guarantee your independence. As we have observed the rights are not self operating. You must act. You must exercise that option, nobody will do it for you. You must seek professional advice to access all the protections Congress granted. You can have the dignity and independence you worked so hard for. Just give me a call at 248-356-3500.
All the best,
Jim Schuster