Spouses and Medicaid: Will you have to lose everything?

When a person can no longer care for oneself and needs help paying for services, people often wonder if payment is available through the Medicaid Long Term Care program. Also, a well known subject — notorious, even — is that the person who will be cared for via Medicaid will find personal assets subject to both assessment (to determine eligibility for Medicaid) and a requirement to “spend down” assets before Medicaid Long Term Care can take over for that person. As such, a common question I receive is: Will the spouse who is well be forced to lose everything by spending down all of the couple’s assets so their incapacitated spouse can qualify for Medicaid Long Term Care?

This used to be a real problem, referred to as “spousal impoverishment.” Luckily, Congress took note that this was happening, and in the late 1980s, created rules that reduced its social effects. These days, under both federal and Virginia law, a healthy spouse is permitted to keep a portion of what are called “countable assets.” To understand what’s countable you need to know what is exempt. Exempt assets include:

• The primary residence — so long as that spouse continues to live there.
• One automobile.
• Most tangible property, such as clothing, household items, etc. are also exempt. 

Everything else is countable.

Most states, including the Commonwealth of Virginia, permit the healthy spouse to retain up to 50 percent of the total countable property of both spouses, so long as it does not exceed the $130,380 cap. According to Medicaid Long Term Care, all countable property owned by a married couple is considered joint assets, with no regard to which spouse holds title to a given asset. The value of all countable property belonging to them either jointly or individually gets added together, and divided by two — and the healthy spouse may keep up to 50 percent of this total (again, subject to the cap). The rest of it must be “spent down” or otherwise divested before the spouse who needs care can be considered eligible to apply for and receive Medicaid Long Term Care. 

If you or an aging loved one is considering possible long-term care and believe Medicaid Long Term Care may be an option, visit a local estate planning and elder law attorney. Medicaid planning can be complicated, taking into account legal and financial issues, taxes and timing is critical. Consider a firm that dedicates significant time and energy to this specific practice of law.