A traditional estate plan, prepared for a couple when they were healthy, will be turned upside down if one of them develops a chronic health problem. The cost of long-term care can quickly deplete a couple’s savings that has taken a life time to acquire. When paying for long-term care, there is always the question of how to preserve assets to meet the life-time needs of the spouse who remains at home and to provide the highest quality of care for the spouse in a facility. Medicaid will help pay for long-term care; however, money received from Medicaid to pay for long-term care may be recouped through Estate Recovery, just like I had to repay my student loan when I graduated from college.
Qualifying for Medicaid is based on a means test of an applicant’s monthly income, assets, and medical need. When a married applicant with spouse at home applies for Medicaid, the applicant spouse is allowed to keep $2,000, and the at-home spouse is allowed to keep their home, one vehicle, plus one half of the countable assets up to a maximum of $115,920. (Medicaid rules set the allowable amount and define countable and noncountable assets.)
Many couples, when applying for Medicaid, make mistakes based on misinformation they have received from a well-intentioned friend, neighbor, or health-care worker. The following example shows how this can happen. Bill has dementia and is being cared for at home by his wife, Mary. Knowing that one day her Bill may need to go to a facility and knowing how much health care cost, Mary discusses her concerns with a neighbor. The neighbor tells Mary that Medicaid requires a spend down of one half of the couple’s assets to qualify for Medicaid. Acting on her neighbor’s advice and unaware that she should file a Community Spouse Resource Allowance (CSRA) with the Idaho Department of Health and Welfare (IDHW) before spending down their money, Mary spends down half of the Couple’s $200,000 that they have in CDs and various bank accounts to $100,000.
Mary then files an application for Medicaid and provides the necessary financial information to IDHW. Mary is told that her attempt to spend down the money had no effect because she had not filed a CSRA before spending down the money. Therefore, she will have to do a second spend down of one half of the couple’s current assets before Bill will be eligible for Medicaid. Had Mary filed the CSRA first, she would have been able to keep $100,000 instead of $50,000. This brief example shows how complex Medicaid rules are, and how mistakes like this one can be avoided by obtaining advice from an attorney experienced in handling Medicaid cases.