Should I Spend Assets, so Spouse’s Nursing Home Stay Is Covered by Medicaid?

MarketWatch’s recent article entitled “Do I have to spend my assets before Medicaid will pay for my spouse’s nursing home?” cautions that the rules for Medicaid, referred to as MassHealth in Massachusetts, coverage of nursing home care are very complicated. Medicaid is the federal-state safety net program for healthcare, referred to as MassHealth in Massachusetts, and it pays for nursing home care.

However, to qualify, nursing home residents must prove that they’re impoverished under MassHealth rules.

In Massachusetts, to be eligible, the nursing home residents must have “countable” assets of fewer than $2,000. Almost all assets are counted against this limit except for the resident’s home, which isn’t countable provided its fair market value (less any mortgage) is less than $955,000 (in 2022). However, MassHealth may secure a lien against a living MassHealth recipient’s principal residence and any other real estate located in Massachusetts in which the recipient has a legal interest. This lien gives MassHealth authority to recover payments for a recipient’s medical expenses if the property is sold while the recipient is living.

If the nursing home resident is married, their spouse — known as the “community” spouse — is limited to $137,400 (in 2022) in countable assets. This is known as the community spouse resource allowance or “CSRA.”

The process of spending down is spending savings until the couple’s assets are below the combined limit of $139,400. This spending can be for anything that benefits either spouse, whether it involves paying off debts, such as a mortgage or line of credit on the house, fixing up the house, buying a car, or even the healthy spouse taking a much-needed vacation.

The only thing they can’t do is give the money away within the 5 year look back period. MassHealth has a 5 year look back on transfers of assets whether outright gifts or transfer to trust.  After 5 years all assets properly transferred outright or to trust are not considered countable assets when applying for Masshealth benefits.  If you are 68 years old today, you are already 73 years old when it comes to proper long term care planning.  As with most things in life, the earlier the better. The sooner a couple spends down, the sooner the nursing home spouse will qualify for MassHealth coverage and the sooner they’ll be able to stop paying the nursing home out-of-pocket.

As is often the case with Medicaid/MassHealth planning, the best strategy may be different in different situations. Consult with an experienced Medicaid/MassHealth elder law attorney.

Book a Call with attorney John A. Laine today.

Reference: MarketWatch (Oct. 22, 2022) “Do I have to spend my assets before Medicaid will pay for my spouse’s nursing home?”