PROTECTING INCOME
In a related article, I the review Medicaid "resource assessment" rules that allow you to protect certain assets when your spouse enters a nursing home. These rules are designed to make sure that the spouse in the community is not rendered penniless by having to deplete all of the couple's resources to pay for a nursing home stay. The government recognized that these asset protection rules wouldn't mean much if the healthy spouse didn't also have sufficient income to meet his or her basic needs. As such, there are also "maintenance allowance" rules that make sure the healthy spouse has sufficient income to live.
To explain the "maintenance allowance" rules, let's consider an
example. Assume your husband enters a nursing home, and your assets have been
spent down to the level where the Medicaid program starts paying his nursing
home bill. In
Taking our example further, let's assume that your husband's income is $1,500 per month, consisting of a $700 pension and Social Security of $800. Your income on the other hand is your Social Security of $750 per month. Without the special spousal protections, your husband's income would go toward paying his nursing home bill and you would be stuck living on just your $750 Social Security payment. However, since the "maintenance allowance" rules allow you income of at least $1,750 per month, this means you get to keep at least $1,000 of your husband's income. That is, when the $1,000 of your husband's income is combined with your $750 Social Security, you have the $1,750 minimum.
These income protections sound great. However, if we follow this one step
further, we'll discover that there is a problem when the husband in our example
dies. The problem is that his income often ends when he dies. That is, his
pension will most likely end or be reduced, and his Social Security will also
stop. While your Social Security may increase when your husband dies, after his
death, your overall income is likely to be lower than the $1,750 minimum.
Because of this problem, Pennsylvania used to have an option that would permit
you to protect additional assets in lieu of keeping some of your husband's
income. In our example, you have an income need of $1,000 per month, and
Pennsylvania used to permit you to keep additional assets that would have
theoretically produced $1,000 each month for the rest of your life. However, as a result of changes implemented
by Pennsylvania on March 5, 2007, there are new ways for a low-income community
spouse to protect additional assets. Navigating
the new rules requires prompt action. As such, the low-income community spouse
needs expert advice more than ever in order to preserve assets so he or she
avoids impoverishment.
In general, no special action is needed to request the basic "maintenance allowance". However, if you wish to protect additional assets, you should seek expert advice before you consume those assets to pay for your spouse's care. The bottomline is that taking proper steps when your spouse enters a nursing home could make the financial side of the long-term care decision less burdensome.
For other nursing home and Medicaid information check out the articles on Medicaid and Your House and Gifts to Qualify for Medicaid
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Robert Clofine 1999-2008