Dale M Krause
Expert
Suppose you have a loved one in a nursing home without an LTCI policy. In that case, the loved one will be required to spend down their assets on the nursing home until they're left with just $2,000, their clothing, and a prepaid funeral before becoming eligible for Medicaid benefits.
In the case of a married couple, if one spouse is in a nursing home, Medicaid allows the spouse who remains at home to keep the family home, one automobile, a prepaid funeral, the household furniture and personal property, and $154,140 of cash or other assets. However, if the couple has $300,000 in savings, they would need to spend $143,860 of their assets before becoming eligible for Medicaid benefits.
At $8,000 per month for nursing home care, it would take 17 months to spend down. However, there is an alternative that can help accelerate Medicaid eligibility and preserve the remaining assets.
If the community spouse purchases a 12-month Medicaid-compliant annuity (MCA) for $143,860, the spouse in the nursing home becomes immediately eligible for Medicaid benefits. The monthly income from the MCA goes to the spouse who remains at home, $11,988 plus interest.
Through this plan, the nursing home spouse pays his social security (i.e., $1,600) to the facility (monthly Medicaid co-pay), less $50.00, so he can obtain personal items – haircuts. The at-home spouse retains her social security (i.e., $1,500) and the MCA monthly payment for a total monthly income of $13,488. By taking advantage of this plan, the couple preserves all their assets and ensures that the spouse in the nursing home receives the care he needs at the lowest possible cost ($1,550).
It's important to remember that waiting to take action can result in devasting asset losses.
In the case of a married couple, if one spouse is in a nursing home, Medicaid allows the spouse who remains at home to keep the family home, one automobile, a prepaid funeral, the household furniture and personal property, and $154,140 of cash or other assets. However, if the couple has $300,000 in savings, they would need to spend $143,860 of their assets before becoming eligible for Medicaid benefits.
At $8,000 per month for nursing home care, it would take 17 months to spend down. However, there is an alternative that can help accelerate Medicaid eligibility and preserve the remaining assets.
If the community spouse purchases a 12-month Medicaid-compliant annuity (MCA) for $143,860, the spouse in the nursing home becomes immediately eligible for Medicaid benefits. The monthly income from the MCA goes to the spouse who remains at home, $11,988 plus interest.
Through this plan, the nursing home spouse pays his social security (i.e., $1,600) to the facility (monthly Medicaid co-pay), less $50.00, so he can obtain personal items – haircuts. The at-home spouse retains her social security (i.e., $1,500) and the MCA monthly payment for a total monthly income of $13,488. By taking advantage of this plan, the couple preserves all their assets and ensures that the spouse in the nursing home receives the care he needs at the lowest possible cost ($1,550).
It's important to remember that waiting to take action can result in devasting asset losses.
