Paying for nursing-home and long-term care can seem daunting when the cost can be $5,000 to $12,000 per month – or more. When a married couple is no longer able or willing to privately pay out of pocket for care and chooses to apply for Medicaid, it’s a complex process. The Medicaid agency must analyze the couple’s income and assets as of a particular date to determine eligibility.
A Medicaid applicant is someone residing in a nursing home, a community-based residential facility or an assisted-living facility, or receiving in-home care. To be eligible for Medicaid benefits in Wisconsin, the applicant may have no more than $2,000 in countable assets. But Medicaid law provides special protections for the spouse of a Medicaid applicant – also known as the “community spouse” – to ensure the spouse has the minimum support needed to continue living at home and to not be financially strapped while the other spouse is receiving long-term-care benefits.
Congress enacted the Medicare Catastrophic Coverage Act in 1988, which includes the Medicaid law that protects the community spouse from being forced to spend all the couple’s assets on only one spouse’s long-term care. Those rules have come to be called the spousal-impoverishment rules. The spousal-impoverishment rules include the community-spouse resource allowance. In Wisconsin the community-spouse resource allowance is also known as the community-spouse asset share. The community-spouse resource allowance is the total “countable assets” the community spouse is allowed to keep in addition to the applicant spouse’s $2,000. They may include cash, stocks, life insurance, cars, tractors, ATVs, boats or any other assets not deemed exempt or unavailable. The community spouse is allowed to keep as much as one-half of the couple’s total countable assets. The maximum the community spouse is allowed to keep without a hearing or a court order is $137,400. The federal government set a standard in 2022 that the least a state may allow a community spouse to retain is $27,480. Some states are more generous to the community spouse; in Wisconsin the minimum is $50,000.
Medicaid agencies must select a date to analyze the couple’s assets. The date the agency chooses can affect two major issues.
- how much money the couple must spend, or plan with, before qualifying for benefits,
- how much a community spouse is allowed to keep.
The date is called the “snapshot” date because Medicaid is taking a picture of the couple’s assets as of that specific date.
In Wisconsin the snapshot date is one of two dates
- the date of “institutionalization” – meaning the day on which the Medicaid applicant enters either a hospital or a long-term-care facility such as a nursing home, in which he or she then stays for at least 30 consecutive days
- the date the Medicaid applicant was first determined functionally eligible for home and community-based waivers – meaning care in a community-based residential facility, care in a an assisted-living facility or in-home care – by the applicant’s local Aging and Disability Resource Center
On the snapshot date the Medicaid agency tabulates the total amount of the assets of a Medicaid applicant and community spouse, excluding the couple’s house and other “exempt” or “unavailable” assets. Then the agency determines how much the community spouse can keep according to the calculation of the community-spouse resource allowance, as previously described. If the couple has assets in excess of the community-spouse resource allowance they will need to spend, or engage in planning to address, the excess funds – stopping them from qualifying for benefits.
Here is an example.
Jim needs nursing-home care and Jane is his community spouse. If Jim and Jane live in Wisconsin, here are three possible outcomes.
- If Jim and Jane have $100,000 or less in assets on the snapshot date, Jane will be allowed to keep $50,000 – the minimum community-spouse resource allowance – and Jim keeps $2,000.
- If Jim and Jane have $200,000 in countable assets on the snapshot date, Jane is allowed to keep half the couple’s assets. Jim will be eligible for Medicaid once their assets have been reduced to a combined figure of $102,000 – $2,000 for Jim and $100,000 for Jane.
- If Jim and Jane have more than $274,800 on the snapshot date, Jane is allowed to keep $137,400 – the maximum community-spouse resource allowance – and Jim is allowed to keep $2,000.
One should note that when the calculation occurs for the community-spouse resource allowance, there may be an excess amount of funds the couple is told they must spend before being eligible for benefits. That’s illustrated in the example by the extra $48,000, $98,000 and $135,400. An experienced elder-law attorney can help create a plan that will aid the community spouse in preserving these “extra” assets to maintain her or his standard of living.
Proper planning can help a couple determine when the best time is to apply for benefits, how to maximize the assets the couple can keep, and how to preserve assets for the community spouse so he or she will not experience financial hardship paying for long-term care.
This is an original article written for Agri-View, a Lee Enterprises agricultural publication based in Madison, Wisconsin. Visit AgriView.com for more information. Reprinted with permission.
