Medicaid is the only public benefit program that pays for long-term nursing home care—Medicare and private health insurance don’t. But for Medicaid to pay, you’ve got to be broke. Worse yet, if you’re married, your spouse, referred to as a “community spouse,” must also be broke—almost. Spouses may keep a modest “Community Spouse Resource Allowance.” In 2024, the maximum CSRA in PA and most states is $154,140 but can be much lower. Some safe harbors exist—the principal residence, within limits, and the IRA, 401(k), or other qualified retirement plan of the “community spouse” remain untouched.
The news is better regarding a spouse’s income. Not only does the income remain untouched, it can sometimes be increased, provided it’s below a specified minimum and also depending upon the spouse’s “shelter costs.” The rules are quite complicated and sometimes allow for an administratively determined increase that exceeds the stated maximum. which in Pennsylvania is $2,465.
In the final analysis, spouses can’t take too much solace. Their increased income, assuming they qualify, comes from that part of the institutionalized spouse’s income not otherwise payable to the care facility. Nursing home residents, as a condition of receiving Medicaid benefits, must, with certain exceptions, first pay over their income to the facility. The government makes up the difference. So, the community spouse has fewer assets and almost always suffers a sharp cut in household income.
The severe financial consequences that befall the spouse of a nursing home resident can be substantially offset with proper planning. George Vasiliadis, attorney with the law firm of Vasiliadis Pappas Associates, notes that “in many cases, excess at-risk assets, instead of being paid over to the nursing home, can be protected for the community spouse via use of a Medicaid-compliant single premium immediate annuity.” This converts non-exempt countable assets into an exempt income stream payable to the community spouse and generally achieves immediate Medicaid eligibility for the institutionalized spouse. Be mindful that Medicaid planning requires specialized knowledge and experience. Very few estate planning attorneys have the requisite expertise.
The lawyers at Vasiliadis Pappas have helped many community spouses avoid impoverishment over the years. If your loved one or someone else you know is in a nursing home and is spending themselves broke, call us at (610) 694-9455. We can help.