MEDICAID FOR MARRIED
COUPLES
(in
Connecticut)
Lisa Nachmias Davis
Davis O'Sullivan &
Priest LLC - Attorneys at Law
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
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
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.
*Figures change
annually.
Note: This
information on
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