ABA Family Legal Guide

The Rights of Older Americans

Health and Long-Term Care Benefits

Paying for Long-Term Care

What happens if my spouse needs nursing-home care but I am still able to live independently? Will all our income and assets have to be used for his or her support before Medicaid will help pay expenses?

If your spouse resides in or may be entering a nursing home, Medicaid has special rules that allow the spouse remaining in the community, the community spouse, to keep more income and assets than permitted under the regular eligibility rules. The specifics vary, but the general structure is as follows.

The community spouse can keep his or her income up to a set level and the state may require all or part of joint income to be used to pay nursing-home expenses, depending upon the particular state's rules.

Most of the income of the nursing-home spouse is considered available to pay for nursing-home care. However, a portion of the nursing-home spouse's income may be kept by the community spouse as a "minimum monthly maintenance needs allowance" if the community spouse's income is below a spousal allowance figure set by the state under federal guidelines. States may permit the community spouse to keep a shelter allowance, if shelter costs (rent, mortgage, taxes, insurance, and utilities) exceed a specified amount.

Assets or resources are treated differently. The state applies a two-step rule. First, Medicaid counts all resources owned by either spouse. This inventory will exclude a few resources, including a home, household goods, personal effects, an automobile, and a burial fund of up to $1,500, and in some states additional monies for funeral and burial services provided the funds are in an irrevocable account.

Second, Medicaid permits the community spouse to keep one-half of the total countable resources, called the protected resources amount, as long as the one-half falls between a specified floor and ceiling, adjusted yearly. If the one-half falls below the floor, the community spouse may keep more of the couple's resources at least up to the floor amount. If the one-half exceeds the ceiling, the excess will be considered available to pay for the cost of nursing-home care. Thus, the community spouse is permitted to keep no more than the ceiling amount even if it equals far less than half of the couple's assets. A more liberal approach in some states permits the community spouse to keep the maximum allowance, even if this is more than one-half of countable assets.

Another special rule applies to your home. Even though your home is normally an excluded resource, the state, in limited circumstances, can place a lien against your home equal to the paid nursing-home expenses. The rules are complicated and vary; the advice of a lawyer experienced in Medicaid law is advisable. Moreover, almost all these rules have hardship exceptions in special circumstances.