MEDICAID FOR MARRIED COUPLES

(in Connecticut)

 

Lisa Nachmias Davis

Davis O'Sullivan & Priest LLC - Attorneys at Law

59 Elm Street, Suite 540


New Haven, CT 06510

203-776-4400

davis@sharinglaw.net ~ www.sharinglaw.net

(revised 1-21-24)

 

USE WITH CAUTION.  In almost every case it is essential for a married couple residing in Connecticut to consult an experienced Connecticut elder law attorney when Medicaid eligibility seems necessary.  Rules have exceptions and work-arounds.  Never assume the worst.  This article is a brief summary of the complex rules that the attorney will apply to ensure that the outcome is the most favorable for the couple. 


Under federal law, when one spouse is residing in a long-term care facility for 30+ days, or requires comparable care at home under a "home care" Medicaid program, the assets of both spouses are considered available, but the spouse not receiving care -- called the "community" spouse -- is entitled to so-called "spousal impoverishment protections."  These can be used to the advantage of the community spouse, but usually require legal help. The spouse in the nursing home is eligible for Medicaid beginning the first of the month by the end of which the combined, non-exempt assets of both spouses are reduced to permitted levels -- $1,600 (net that month's income) plus the "CSPA" described below. Values are determined using bank records, not your checkbook; anything that is not actually money has to be valued.

(BIG EXCEPTION:  if each person WILL file a SEPARATE TAX RETURN (even if prior years were joint) and the spouse who needs care does not receive Medicare, is age 19-64, and has taxable income under 138% of poverty, that person should be able to qualify for "Husky D" (low income adult Medicaid) which covers nursing home care, and this article NEED NOT APPLY -- but make sure to say it is a "household of one" (that is, one person on that person's tax return).  However, income has to be paid to the nursing home.  If the person needs care at home, the income rules differ but much of this article DOES apply for the person to get personal care assistance under "Community First Choice" which also has "spousal impoverishment protections.  Consult a knowledgeable attorney.)

 

1.    Exempt Assets.  If occupied by the "community spouse," the home is protected, no matter its value.  It does not have to be sold.  No lien is placed on the home.  (AFTER the spouse in the nursing home qualifies for Medicaid, the community spouse may sell the home and use the proceeds for whatever (s)he wants, so it is a good idea to transfer title into the name of the community spouse, and doing so is totally OK.)  Even if the spouse receiving care dies and his/her name is on the deed at death, the State will not take the home.  Also, one car of any value is allowed when there is a community spouse.  These are the big two, but there are other "exempt assets" -- click for my article on this.

 

2.    Assets of BOTH SPOUSES Count.  Putting assets into the name of one spouse does not mean the other spouse qualifies for Medicaid.  The State wants to know about the assets of EITHER or BOTH spouses.  This means that the community spouse also MUST provide information about his/her assets and all transactions for the prior 5 years.  This can create headaches when couples are separated or don't share financial information. (For federal purposes, there is only "married" and "divorced" - nothing in between.)  It doesn't  matter if the spouses  kept everything separate, filed separate tax returns, etc.  Remember that ASSETS ARE NOT INCOME.  The INCOME of the community spouse has no effect on the other spouse's eligibility. 

 

3.   Transfers BETWEEN Spouse are No Problem But Don't Help Eligibility.  Because assets of both spouses count, gifts between spouses create no problems  (at least up until a reasonable time after the ill spouse qualifies for Medicaid) but don't help Medicaid eligibility.

 

4.   Minimum Monthly Needs Allowance ("MMNA").  Federal law sets up a formula that computes what the community spouse "needs" to live without poverty. In 2024, this "need" is capped at $3,853.50/month (set annually), and could be less.  Only certain actual expenses are factored in -- mortgage, taxes, condo payment, rent, insurance.    (The state also uses a flat figure for utility expenses; if you don't own a home and payment arrangements are informal, you may need to convert them to a formal lease arrangement.)  If the income of the community spouse is not enough for his or her "MMNA," income of the other spouse -- known as the "institutionalized spouse" -- can be given to the "community spouse" rather than paid to the nursing home as applied income, which otherwise would be required (see article on applied income).  This is called a Community Spouse Allowance.  If this still isn't enough, it's possible to go to an administrative hearing and ask the State to allow the community spouse to keep more of the couple's savings so as to generate investment income to bring the community spouse's income up to this MMNA, if there are "exceptional circumstances" (for instance if the community spouse is caring for an adult disabled child or is in assisted living and needs care there).  Also, it may be possible to get a probate court to order more, and if the procedural rules are strictly followed, the state must accept that, but this is very tricky and requires advance planning -- consult an elder law attorney who knows about the "Valliere" case.   If the community spouse actually has more income, in most cases, (s)he can keep all of it; although the law may allow the State to check whether the spouse, a "legally liable relative," might have to chip in modestly to the cost of the other spouse's care, but in Connecticut, this is (a) rare and (b) legally disputed.  And if there are dependent children at home with the community spouse, the institutionalized spouse may also be allowed to pay a "family allowance" for the children.

 

5.   Community Spouse Resource Allowance a/k/a Community Spouse Protected Amount or "CSPA". Federal law sets up a mechanism to divide up a couple's assets into (1) an amount that is "protected" for the community spouse and does not have to be spent before the other spouse qualifies for Medicaid, and (2) the amount that is not protected, and must be reduced to $1,600 (different figure in other states).  In Connecticut, the protected amount is the LESSER of $154,140* (adjusted annually) or one-half of the couple's combined assets computed "as of the first day of a continuous 30-day period of institutionalization" (meaning, hospital OR nursing home care or sometimes, long-term care services at home, but this gets tricky -- consult an elder law attorney if you think that at an earlier date, when you had more assets, the need for long-term care had already begun).  AT LEAST $50,000 will be protected, however, even if half is less than that.  This "one-half" rule means it is important NOT TO SPEND ASSETS TOO SOON if Medicaid is likely in the future.  Half of something big is more than half of something small!  As discussed in #4, if the couple's income isn't sufficient to be sure that the community spouse has enough for his/her "MMNA," it is quite possible to keep a lot more money, but only after going through an administrative hearing.  Factors include not only the expenses listed in #4 but the prevailing interest rates at the time of the hearing.  (A probate court might order more, but you definitely need an attorney and it is tricky.)  In any event, when the couple's assets are more than the protected amount plus $1,600, the excess assets have to be "spent down" or reduced -- not necessarily by paying for care. 

6.    Annuitizing an IRA.  If the assets include an IRA owned by the community spouse, the asset can be reduced -- eliminated -- by converting it to a stream of income.  This means that the money can no longer be taken out in a lump sum but only as a stream of income over a period of months or years.  Also, the State MUST be named as a beneficiary to get repaid for the care provided to the institutionalized spouse out of any payments that remain when the community spouse dies, up to the amount of Medicaid received.  (If there is a disabled child or child under 21, the state can be named as second after the child.) Drawback:  greatly accelerated income tax consequences.  DO NOT TRY THIS AT HOME.  Needs special help.  Generally it won't work for the institutionalized spouse to annuitize an IRA, because payments will have to go to the nursing home.

7.    Buying a Medicaid-Compliant Annuity.  Thanks to a case called Lopes, the community spouse can "spend down" excess assets by purchasing an annuity that meets certain criteria (is irrevocable, non-assignable, no cash value; if bought with the other spouse's assets, has a term certain that is no longer than the community spouse's actuarial life expectancy) and that names the State as beneficiary to get repaid on the community spouse's death for care provided to the institutionalized spouse out of any payments that remain when the community spouse dies.  (After any disabled child or child under 21.)  TREAD CAREFULLY.  The company may not understand the requirements; buying something with a payback clause may not be the best option; for very short-term annuities, there may be an extra charge.  And make sure the payments  don't start too soon and put the assets back over the maximum.  USE AN ATTORNEY.

 

8.    Post-Eligibility.  In general, AFTER the institutionalized spouse qualifies for Medicaid, the community spouse can do what he/she wants with his/her assets and income.  Exception:  (s)he cannot GIVE AWAY the house or the proceeds of a reverse mortgage or home equity loan without causing the institutionalized spouse to lose eligibility, at least the rules say so.  The house could, however, be sold, and the proceeds disposed of!  (Of course, any gift may affect the future Medicaid eligibility of the community spouse.)  There is no lien on the house or assets of the community spouse and when (s)he dies, in general, no claim of reimbursement against the community spouse's estate for the costs of the other spouse's care.  (Certain exceptions may apply.)  The community spouse may wish to change his/her will so that only the statutory minimum -- the right to income on 1/3 of the probate estate -- is left to the institutionalized spouse.  The community spouse should also check that any beneficiary designations, such as insurance beneficiaries, don't name the institutionalized spouse either.

 

9.   Obligations.  To the extent that the income of the institutionalized spouse is not allowed to be paid to the community spouse for the "community spouse allowance" or "family allowance," or for health insurance or medical expenses, that institutionalized spouse's income must go to the nursing home as "applied income" for every month or partial month during which the institutionalized spouse receives Medicaid.  Failure to pay applied income may result in liability to the nursing home, and the nursing home -- unlike the State -- can sue, put a lien on the house, etc.  Also:  a "recertification" form must be filed for the institutionalized spouse, usually every 6 months or every year after qualification.    Also -- certain debts don't go away just because the other spouse's income is going to the nursing home. The community spouse may be stuck with tax bills or other debt payments that were previously paid out of two incomes.  (NOTE:  different figures are used when seeking home care, and you might need a pooled trust if the spouse who needs care has income over $2829/month (2024 figure.) 

10. Community First Choice.  In some situations, for instance, if seeking home care but a transfer of assets occurred within the past 5 years, it may be possible to apply these same "spousal impoverishment protections" when applying for the plain vanilla "Husky C" benefit and asking for "community first choice" as part of the care plan, that is, a personal care assistant. The problem is that the income limit is likely to be $1128/month, not $2829.  This is a very specialized situation and requires reducing the person's income to a certain cap or spending the excess over the cap as a kind of deductible.

 

The devil can be in the details!
Consult a Connecticut elder law attorney! A "medicaid specialist" may know how to get Medicaid approved but may not help do what's best for the community spouse.

  

*Figures change annually.


Note:
  This information on CONNECTICUT law is maintained to benefit the elderly in Connecticut and nationwide by providing a resource to attorneys, caregivers, and others assisting the elderly.  However, accuracy and currency are not guaranteed.  The law changes often; this may be out of date.

USE AT YOUR OWN RISK. Please report changes, errors, and suggestions to Lisa Davis.

 

Lisa Nachmias Davis

Davis O'Sullivan & Priest LLC - Attorneys at Law

59 Elm Street, Suite 540

New Haven, CT 06510 ~ 203-776-4400

davis@sharinglaw.net ~ www.sharinglaw.net