Updated: Apr 14, 2022
This blog series will explore the Elder Law issues at work behind the scenes as aging married couples, of average means and no long-term care insurance, become caregivers for each other. I will share with you how and why Long-Term Care Medicaid (“Medicaid”) is often the best solution for managing the care of a disabled spouse and paying for it. The time to explore the Medicaid option is when the need for help with activities of daily living first arises. This is when the couple has the most assets to plan with. Do not wait until you have to go into savings to reach out for help.
Medicaid is a benefit for the disabled, not the indigent. The first step to approval is the mandatory requirement that the applicant prove they require assistance with at least one activity of daily living. This is a medical determination made by the Medicaid medical staff. If there is no need for assistance, qualifying for Medicaid is impossible. A medical determination that assistance is needed triggers the financial qualification process. If the medical need is met, well then -yes, there are some financial limitations on assets.
Delaware Medicaid will pay for up to 60 hours per week for home health aides. It will pay for assisted living and skilled nursing. There are limited Medicaid certified beds in assisted living facilities. Medicaid beds are also limited for skilled nursing patients with dementia. Delaware, however, offers more Medicaid coverage than most states. The program is designed to keep the patient at home if possible.
Please note that the financial qualification rules that most people are aware of relate to single individuals applying for Medicaid. The rules for a couple are found in a separate chapter of the regulations from those governing individuals. Few people know that there are different rules for married couples. The chapter is titled “Spousal Impoverishment”. The legislative intent is that the community spouse (non-applying spouse) not become impoverished just because their spouse needs expensive care. To carry out this intent requires legal work for the married couple as a whole.
The financial rules treat a married couple as an economic unit of one. All assets (“assets” include each person’s income) are considered regardless of how they are titled: individually or jointly. They are divided into two baskets, protected and unprotected (sometimes referred to as countable and non-countable).
Protected assets include the couple’s primary residence, one car, all personal property and two prepaid funerals up to $15,000 each; plus the community spouse’s income, their IRA/401K, and $132,800 in other assets. All remaining assets are considered countable (unprotected), and these assets must be dealt with to achieve qualification. The general rule for dealing with countable assets anticipates that the couple will purchase goods and services to reach financial compliance. This consumes the couple’s assets. However, when you ask a non-elder law attorney, this is the advice you’re given.
Fortunately, there are exceptions to the general rule that allow the couple to keep these countable assets and still achieve financial compliance. The regulations allow for turning countable/unprotected assets into protected assets. This change in categorization is achieved by turning such assets (cash) into a stream of income for the community spouse. Any asset treated as the community spouse’s income is not countable and therefore protected.
As noted above, the applicant spouse’s income is countable and must meet certain restrictions. Their gross monthly income cannot exceed $1,950. If it does, then a Miller trust is required to bring the amount of income below the ceiling. See my earlier blogs and videos on Miller trusts.
Protecting The Applicant Spouse’s Qualification
Once the application is approved (assets and income are in their proper position), the regulations require retitling all protected assets into the name of the community spouse. The reason why is that the application is subject to recertification every year. The rules for recertification limit the Medicaid spouse to $2,000 in assets. Jointly owned assets are retitled into the name of the community spouse to meet this limitation.
An important step in protecting the applicant spouse’s qualification going forward is to address the issue of the community spouse predeceasing the Medicaid spouse. This is done in the design of the community spouse’s will. If the Medicaid spouse inherits assets from the community spouse, then their assets in most cases will exceed $2,000. These assets will have to be spent down to maintain financial qualification. If, however, the surviving spouse inherits into a special needs trust contained in the predeceased spouse’s will, then they do not lose their qualification and the assets are there for them going forward.
Planning for the Community Spouse
In planning for the community spouse, we anticipate that that person will be the survivor. This is more likely the case if the couple brings on assistance earlier when the need for care first arises, rather than later. Once all is in place for the Medicaid spouse, there is the opportunity to preplan for the community spouse’s eventual qualification for Medicaid. This is done by moving assets, usually the family residence, into the name of an irrevocable trust. A deed transfer is used to move ownership of the house into the name of the trust. The community spouse, however, keeps control because they retain the right to live in the home for the rest of their life. After five years, the house will never be a countable asset and Medicaid cannot put a lien on the house.
Conclusion – Say Yes to Medicaid Planning for Married Couples
As it turns out, a married couple of average means and no long-term care insurance has options that allow them to afford long term care without going broke. Married couples often suffer in silence as one of them takes care of the other. They have committed to each other for better or worse. The problem is, as the spouse in need requires more and more care, the caregiving spouse typically doubles down and soldiers on. They don’t ask for the support they need until it is way overdue. The result is a decline in their health and quality of life. Why? Because they are afraid of running out of money and becoming a burden on their children.
In this context, Medicaid is a very powerful benefit. Delaware Medicaid will pay up to 60 hours a week for home health aides. It will also pay for care in an assisted living and nursing facility. It allows the family to have confidence that the couple will not run out of money just because a spouse needs expensive care. This confidence gives them the freedom to hire the care support early in the process. The extra support allows the caregiving spouse to pace themselves, get enough rest, and take time off. It allows the adult children to interact with their parent more as children rather than as primary caregivers. The overall quality of life is enhanced for everyone.