Almost half of all seniors currently in long-term care rely on Medicaid to help cover the cost of that care. If you, or your spouse, are facing the need for long-term care (LTC) in the near future, you may also find yourself turning to Medicaid to help. The Medicaid eligibility guidelines and application procedures, however, are complex and confusing. In addition, there are a number of myths and misconceptions about qualifying for Medicaid that can cause otherwise eligible seniors to think twice about applying. To help dispel one of those myths, let’s take a look at the Medicaid spousal impoverishment rules.
Why Would You Need to Qualify for Medicaid?
As you age, your odds of eventually needing LTC increases dramatically. If you do eventually end up in LTC, the cost of that care may be prohibitive. The average cost of LTC in Maryland is significantly higher than the national figures for the last several years. Nationwide, the average yearly cost of LTC was about $90,000 for 2018 while in Maryland the average for that same year was $116,070. Experts predict that figure will rise steadily over the next couple of decades. What makes the cost of LTC such a concern, however, is the fact that neither Medicare nor most health insurance policies will cover LTC costs. Unless you can afford to pay out of pocket, that leaves Medicaid as your only option because Medicaid does pay for LTC. Not surprisingly, over half of all seniors currently in LTC rely on Medicaid to help cover their LTC costs.
The fact that Medicaid covers nursing home expenses is great news – as long as you qualify for benefits. As you may have heard, Medicaid eligibility is based, in part, on an applicant’s income and “countable resources.” Both limits are relatively low. As a senior on a fixed income, your income may not be an issue; however, your countable resources (assets) could be given that the limit for an individual is only $2,000. Assets such as your home and a vehicle are exempt from consideration; however, you could still find yourself over the limit. Of even greater concern is the impact your efforts to qualify for Medicaid will have on your community spouse (a spouse that is not in LTC).
Medicaid’s Spousal Impoverishment Rules
There was a time when applying for Medicaid because you needed long-term care often meant that your spouse was left without income or resources because the income and assets of a married couple were combined for the purpose of determining Medicaid eligibility. If a couple’s assets exceeded the program limit, those assets had to be “spent-down” until their combined value dropped below the eligibility threshold. Consequently, the spouse that remained at home, known as the “community spouse,” was frequently left without much-needed resources. The good news is that Medicaid eventually implemented the “spousal impoverishment rules” to address this problem. In essence, the spousal impoverishment rules allow the community spouse to retain a significant amount of resources and, in some cases, some of the institutionalized spouse’s monthly income as well.
In Maryland, a community spouse may retain non-exempt resources owned by one or both spouses valued at a minimum of $24,720 and a maximum of $123,600 as of 2018. If the community spouse’s resources do not reach the minimum value of $24,720 then he/she can retain some of the nursing home spouse’s assets. In addition, the community spouse can keep part of the institutionalized spouse’s income if the community spouse has an income of less than $2,030 per month. If the spouse can document high shelter expenses (rent, utilities, phone, etc.) then the income limit may be raised to a maximum of $3,090.
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