When one spouse of a married couple applies for long-term care Medicaid, the value of both spouses’ assets is considered for eligibility purposes. For liquid assets, such as bank accounts, stocks and savings, it does not matter if the asset is held in a joint account with both names or in separate accounts with only one name. All accounts are counted. As an example:
Joe and Sue are married. Sue is applying for Medicaid but Joe is not. Joe has an account in his name only with $25,000. Sue has an account in her only name with $50,000. Joe and Sue also have a third, joint account in both names, with $75,000. Therefore, from Medicaid’s perspective, Sue has assets valued at $150,000 ($25K + $50K + $75K = $150K).
For non-liquid assets, such as homes or property, it does not matter which name or names are on the deed. All property assets of married couples are considered to be joint assets by Medicaid even if only one name is on the deed.
The good news is there are many exceptions to how assets are counted. The bad news is, it is very confusing.
Medicaid allows the spouse of the long-term care applicant to keep a portion of the assets, rather than require the couple to completely spend down all of their assets on care for eligibility purposes. In addition, there are both exceptions and strategies that couples can employ when considering their joint assets and applying for Medicaid.
It is easier to understand how an individual can qualify for Medicaid and how their spouse can retain some, or even most, of their assets if one first understands some Medicaid terminology.
Community Spouse – A community spouse (also called the well spouse or non-applicant spouse) is the spouse of an individual who is receiving Medicaid-funded, long-term care in an institutional setting, such as a nursing home, or is receiving services via a Home and Community Based Services (HCBS) Medicaid Waiver. To be considered a community spouse, the non-applicant spouse must not be living in an institutional setting. Rather, he or she must be living in their personal home, the home of a relative, or an assisted living facility.
Institutionalized Spouse – An institutionalized spouse is the spouse who is applying for long-term care Medicaid. While this spouse is referred to as the “institutionalized” spouse, the name is misleading. The spouse doesn’t necessarily have to reside in an institution, such as a nursing home facility. The spouse can instead receive long-term care services via a HCBS Medicaid Waiver at home or in the community.
Spousal Impoverishment Law – Also known as Division of Assets, this law was put into effect to protect the community spouse and ensure he or she has adequate finances to support him- or herself. If not for the Spousal Impoverishment Law, Medicaid would combine the assets and income of both spouses and consider everything belonging to the applicant. The law would require that the couple spend everything on care. Therefore, the community spouse would be “impoverished” and unable to support himself or herself.
Community Spouse Resource Allowance (CSRA) – This is the amount of assets the community spouse is allowed to keep under the Spousal Impoverishment Law.
Minimum Monthly Maintenance Needs Allowance (MMMNA) – Although not related to a couples’ assets, the MMMNA is the minimum amount of the institutionalized spouse’s income the community spouse is allowed to keep. It is calculated based on one’s housing costs and other factors.
Countable Assets – These are assets that are liquid (can be turned to cash) and therefore, presumably, can be used to pay for care. These include life insurance policies that have a face value over $1,500, money market accounts, savings and checking accounts, certificates of deposit (CDs), mutual funds, stocks, and bonds, as well as property, such as second homes and second cars.
Exempt Assets – Not all assets are counted toward eligibility for Medicaid. While life insurance policies are considered countable assets, there is an exception. A life insurance policy that has a face value less than $1,500 is considered exempt. The couple’s primary home is also exempt up to a certain amount, provided the home is owner-occupied. In 2022, for some states this value is $636,000, and in other states it is $955,000. In addition, personal effects, household items, a single vehicle, and burial plots are exempt from Medicaid eligibility.
In order for a senior to qualify for long-term Medicaid, the applicant must not have assets over a certain amount. This figure may change annually and differs in some states. In 2022, in most states, this amount is restricted to $2,000. Some states allow an applicant to have a higher amount of assets, but in no state does that amount exceed $130,000, which is California’s limit.
The Community Spouse Resource Allowance (CSRA) also varies based on the state. As of 2022, the minimum resource amount a state may allow is $27,480, while the maximum resource amount a state may allow is $137,400.
A further complication is that there are two different ways in which states can calculate the CSRA. There are 50% states and 100% states. In the states known as 50% states, the community spouse is able to keep up to 50% of the resources, up to the maximum allowable amount. That said, 50% states do have a minimum resource allowance. And if the non-applicant spouse’s share falls under this minimum amount, he or she is allowed to keep 100% of the assets, up to the minimum resource allowance amount. In many states, as of 2022, this amount is $27,480. In 100% states, the community spouse is able to keep 100% of the resources, again, up to the allowable amount. In many states, as of 2022, this amount is $137,400.
In 50% states, when calculating the CSRA, all exempt assets are deducted from the joint assets, and the remaining assets are added together and then divided by two. For example, say a married couple has $150,000 in joint assets that are non-exempt. When divided by two, it equals $75,000. So, this leaves $75,000 for the institutionalized spouse and $75,000 for the well spouse. The non-applicant/well spouse is able to keep his or her $75,000 because it is under the maximum CSRA amount ($137,400). However, the applicant spouse will have to spend down their $75,000 to qualify for Medicaid. The applicant spouse’s maximum amount is $2,000.
In a 100% state, the community spouse may keep up to the maximum amount the state allows. Again, this figure comes to $137,400 in most states as of 2022.
|2022 Medicaid Community Spouse Resource Allowance|
|Couples’ Combined Assets||$50,000||$100,000||$150,000||$250,000||$500,000|
|Amount the “Community Spouse” keeps in a 50% State||$25,000||$50,000||$75,000||$125,000||$137,400|
|Amount the “Community Spouse” keeps in a 100% State||$50,000||$100,000||$137,400||$137,400||$137,400|
While not an asset limit, the Monthly Maintenance Needs Allowance is relevant for those who wish to turn assets into income through the purchase of an annuity. (Learn more about annuities below.) The federal government sets a minimum and maximum monthly maintenance needs allowance for the community spouse. And the amount allowed varies by state. As of 2022, this amount is somewhere between $2,228.75 and $3,435.
When a married couple has assets over the allowable amount, there are several strategies that can be used to lower the amount of countable assets. In turn, this allows an applicant spouse to become eligible for Medicaid. At the same time, these strategies may help families lower debt or preserve their assets.
Pay Existing Bills – Assets can be used to pay existing debt. For instance, one may pay off a mortgage, credit card bills, outstanding medical bills, or pay off a car loan. Medicaid does not penalize applicants for these financial transactions.
Make Home Improvements or Home Modifications – Assets can be spent on improving one’s home, such as replacing a leaky roof and updating heating and plumbing systems. In addition, assets can be used toward making home modifications, such as widening doorways for wheelchair access, replacing regular bathroom sinks with pedestal sinks, and installing a roll-in shower.
Purchase Annuities – An annuity is another strategy that is commonly employed to convert liquid assets into exempt assets. With an annuity, assets are turned into monthly income for the well spouse. (The income of a Medicaid applicants’ spouse is not counted toward eligibility of the applicant). The way an annuity works is a lump sum is paid to a commercial insurance company and then the well spouse is in turn paid a monthly payment.
It’s important to note, the annuity must be irrevocable, meaning it cannot be cancelled or changed. And the payments must not exceed the life expectancy of the well spouse. There are further state-specific requirements for annuities, so it is best to consult with a Medicaid planner.
Create a Life Care Agreement – Life care agreements are formal agreements that are frequently made between an elderly individual and a relative or close family friend. Via this agreement, a transfer of assets is made in exchange for providing care for the senior. For instance, one may pay for someone to come to their home several days a week and provide assistance with housecleaning, meal preparation, transportation to appointments, and personal care with daily activities, such as dressing and bathing. In addition, one may serve as an advocate for an individual in a nursing home. Learn more about life care agreements.
Create a Funeral Trust – Certain irrevocable funeral trusts created for the Medicaid candidate and / or their spouse can enable a couple to reduce their countable assets by up to $30,000 (depending on their state of residence). Doing so helps to qualify a person for Medicaid while taking care of an inevitable expense that will eventually come out of the family’s resources. Be aware that not all funeral trusts are exempt and creating the trust can be complicated. Learn more.
The subject of married couples and joint assets for Medicaid eligibility is a complicated matter. It is strongly advised that one seek assistance from a professional Medicaid planner before transferring or spending down assets or attempting any Medicaid planning techniques. Planners almost universally offer a no-cost introductory call during which a family’s situation is assessed. Learn more or be connected to a Medicaid planner here.
It’s very important to note that one cannot simply give away assets in order to qualify for Medicaid. If one gifts or transfers assets under fair market value, he or she may be penalized and a lengthy period of Medicaid ineligibility might result. Learn more about the Medicaid Look Back Period.