Spouses of Medicaid Applicants, You DO have rights: the right to keep your life savings; the right to keep your income; the right to support.
• Congress considered and rejected the proposition that our 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 needy 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.
Hello, 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. Worry no more. We have helped hundreds of families maintain their financial security and get good care in the nursing home. Spouse in a Michigan nursing home? You can save everything. Period
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.
“Can I save our house that took 30 years to pay for, our lifetime of savings and our income?”
Yes. When we say everything we mean it. You can have Medicaid pay the nursing home for your spouse and you, the community spouse, can save the rest for your needs and for your family when you pass on. Everything. And, your family home will not go through probate and the government will not get everything. However this will not happen automatically. You must take action as we lay out below.
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 (in 2022). That is the maximum “Community Spouse Resource Allowance” (CSRA). It will be less if the couple has less than two times $137,400. For example if a couple has $150,000 in total savings, then the CSRA is half or $75,000. Amounts 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. If you already have a nursing home bill you may be able to get it covered for the three months before the Medicaid application is submitted. Of course, the application must ultimately be approved to have those three months covered.
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, which says the Medicaid department must allow the community spouse the share of assets specified in a court order of support. You must hire an elder law attorney since other lawyers don’t know Medicaid and probate courts don’t have an in-depth understanding of the Medicaid law. There is no guarantee the judge will grant your petition or the amount you request. In fact, some courts in Michigan are stingy in their allowance to the community spouse. The Order from the court must be presented to the Medicaid Department and the department may appeal the Order.
Annuity Income Option
You may take the “excess assets” over your CSRA and purchase an annuity. The Michigan Medicaid policy concerning annuities is very complicated and such annuities should only be purchased through an agent intimately familiar with the rules. The policy application varies depending on whether the applicant or spouse purchase the annuity and whether or not IRA/401k tax deferred funds are used to purchase the annuity. Having said that, annuities can be used to save substantial sums of money. Talk with your Elder Law attorney to determine if an annuity is the best option in your case.
Medicaid Asset Protection Trust for the Community Spouse
For years Michigan recognized the community spouse asset protection trust called a “sole benefit trust.” It is recognized by the federal “State Medicaid Manual” published by CMS and the Michigan Supreme Court in Hegadorn v. DHS. Under this trust the applicant can transfer all assets that would have to be cashed out or sold and spent but instead transfer those assets to the sole benefit trust for the community spouse. They would not have to be spent once that is done.
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 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, 2022, 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 $500. Under the Medicaid rules her income is $1,677.50 short of the $2,177.50 minimum CSIA. So Medicaid will allow her to have $1,677.50 of her husband’s income. What about the rest, $822.50, 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 Blue Cross Medicare Supplemental insurance. The rest will go to the nursing home. He or his representative, must sign an “Intent to Contribute Income” for the spousal allowance to be effective. What if Mrs. Smith needs the income that would go to the nursing home? Can she get it? Yes, see below.
The Medicaid department will allow the community spouse an increase above the minimum – if there is sufficient resident income – by consideration of whether she needs an “excess shelter allowance.” This allowance will not allow the spouse more than $3,435 in total income, which includes her income and the contribution from the nursing home spouse. It takes a court order for the Medicaid department to allow anything more.
Increasing the CSIA – Court Order
What if the patient’s income is very substantial? A spouse can hire a lawyer and go to the probate court for an order that additional income be allowed to her. In fact, if the spouse can show need she may have the court order all of the income to her.
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 for a referral to a good Elder Law attorney at 248-356-3500.
Jim Schuster