Medicaid Planning 101: Part 2 – Married Couples

If an elderly relative needs to qualify for Medicaid in order to pay for long-term care costs, including at an assisted living facility or nursing home, where do you start? We posed this question to Madeline Thorn, an attorney at Fendrick Morgan, a Life Care Planning Law Firm in New Jersey.

Typically, eligibility is first determined by looking at the applicant’s marital status. If the person who needs Medicaid is married, the qualification process is less straightforward than it is for single people.

The scenario often looks like this: There is an unhealthy spouse who needs Medicaid to pay for long-term care, and a healthy spouse, referred to as the “community spouse,” who is able to live at home without assistance.

The challenge is qualifying one spouse for Medicaid without impoverishing the community spouse. To accomplish this, two sets of rules apply. For the unhealthy spouse, the qualification criteria are the same as for single individuals. “In order to qualify for Medicaid as a single person in New Jersey, you need to have less than $2,000 in assets and your gross income cannot exceed $2,349,” Madeline explains, adding that the Medicaid qualification criteria and application process vary by state. “If the unhealthy spouse’s gross income exceeds $2,349, the solution is to establish a Qualified Income Trust for his or her income. For healthy spouses, however, there are no income limits, and, in fact, the income of the community spouse does not come into play for eligibility purposes.” 

With respect to a couple’s assets, the community spouse is entitled to keep, essentially, half of the marital assets, so long as they are no less than $25,728 and are no more than $128,640. This amount is referred to as the “Community Spouse Resource Allowance.” The assets in excess of the Community Spouse Resource Allowance need to be spent down. “While the assets would need to be spent down to the Community Spouse Resource Allowance limit, countable assets do not include the primary residence, one car and personal items, like jewelry and furniture,” Madeline notes.

There’s the clinical eligibility hurdle, as well. This requires a comprehensive needs assessment of the applicant to ensure that the applicant needs the services provided in a long-term care facility. This standard is usually easy to meet when the applicant is already in a long-term care facility. In New Jersey, the state sends a nurse to conduct the Pre-Admission Screening, which provides the state the information needed to establish clinical eligibility.

Once a person is eligible for, and receiving, Medicaid, he or she must stay at or below $2,000 in assets to maintain eligibility. In New Jersey, Medicaid will perform periodic redeterminations to make sure that its recipients still meet the financial criteria.

If you or someone you love might need Medicaid to help pay for long-term care, what should you do? Madeline says your best bet is to schedule an appointment with your local Life Care Planning Law Firm and start the planning process now. “If you start early enough, there may be ways to preserve some of your loved one’s assets from their future care costs and anticipate any issues that may arise during the application process. The earlier you start planning, the more options you’ll have and the better those options will be than if you had waited.”