Medicaid for long-term care — what assets can the spouse at home keep?

The mounting cost of long-term care in a nursing home can be financially devasting. Medicaid can help defray the costs of long-term care. Medicaid is a means-based program that has both income and asset eligibility limits. Navigating the complex federal and state eligibility rules that apply to a married couple when an individual needs to apply for Medicaid can be overwhelming. Because the rules are so complex, it is important to make sure that you consult with a Pennsylvania licensed Elder Law Attorney that can guide you.

The first step in the Medicaid application process is the gathering of financial documentation to determine the “asset split”. A Resource Assessment will need to be filed with the local County Assistance Office (CAO) which will give a snapshot of the couple’s available assets as of the date of the spouse’s admission to a long-term care facility. This is when the asset split occurs. The asset split refers to the federal and state rules that are aimed to protect a spouse living in the community from becoming impoverished when the other spouse requires long-term care in a skilled nursing facility. Under the federal and state rules, a spouse living in the community is permitted to keep onehalf of the couple’s countable assets up to a maximum of $148,620 for 2023, and a minimum of $29,724 for 2023.

Once the asset split occurs, the applicant spouse (which is the spouse requiring the skilled nursing care) must spend-down their one-half of the countable resources. The applicant spouse may have no more than $2,400 in countable assets in their name if their gross income is $2,742 or more per month. An applicant spouse may have no more than $8,000 in countable assets if their gross income is less than $2,742 per month.

When determining whether an applicant meets the asset limit, the Department of Human Services (“DHS”) will only look at assets they consider countable. Countable assets generally include all belongings except: (1) personal possessions, such as clothing, furniture, and jewelry; (2) one motor vehicle; (3) an applicant’s principal residence (if it is in Pennsylvania and the equity does not exceed $688,000); and (4) assets that are considered inaccessible for one reason or another, such as a spouse’s IRA.

Another important rule when applying for Medicaid is the look-back period. When applying for Medicaid for long-term care, the applicant will be required to provide financial information for the previous five years. If either spouse gifted or sold for less than fair market value assets within that timeframe, then DHS could impose a Medicaid penalty. This means that there could be a period when Medicaid does not pay for the care in the skilled nursing facility because of the gifts that were made.

The rules regarding Medicaid are complex and there is a lot of misunderstanding on the spenddown and how best to protect assets. The most important thing to remember is that the spenddown does not begin to occur until after the date of admission to the skilled nursing facility. It is best to wait until the Resource Assessment has been filed and there is a clear understanding of the amount that must be spent. By spending down prior to the date of admission and prior to the snapshot date, one could unintentionally reduce the amount of assets that the community spouse is permitted to keep. Although nursing homes often offer to help apply for Medicaid for a resident, it is important to understand that it is advisable to consult with a qualified attorney as the nursing home employee may not be familiar with all of the strategies available to protect assets for the community spouse.

The legal advice in this column is general in nature, consult your attorney for advice to fit your particular situation.

Rebecca A. Hobbs, Esquire is licensed to practice in the Commonwealth of Pennsylvania and is certified as an Elder Law Attorney by the National Elder Law Foundation as authorized by the Pennsylvania Supreme Court. She is a principal of the law firm of O’Donnell, Weiss & Mattei, P.C., 41 High Street, Pottstown, and 347 Bridge Street, Phoenixville,610-323-2800, www. owmlaw.com. You can reach Ms. Hobbs at rhobbs@owmlaw.com