Financial Protection When Your Spouse Needs Nursing Home Care - Part 1

Nursing home bills usually turn a person's world upside down when his or her spouse requires nursing home care (the average Indiana nursing home bed costs $6,078 per month in 2016). This article begins a two-part series about state and federal law can save a nursing home resident's spouse from poverty, and how an experienced elder law attorney can help the spouse increase the amount of assets that can be saved from expensive long-term care.

Spousal Impoverishment Law

Medicaid helps people pay for nursing home care when their income and assets cannot pay the entire cost. Congress passed the Medicare Catastrophic Coverage Act (MCCA) in 1988 to protect a nursing home resident's spouse from poverty. The law guarantees that the spouse living independently in the community (called the "community spouse") may keep certain "resources" (resources are certain assets that are not exempt from being counted) and amounts of income to be able to live independently after the spouse in a nursing home (called the "institutional spouse") qualifies for Medicaid.

Resource Allowances

Medicaid eligibility requirements limit an institutional spouse's allowable resources ($2,000 in Indiana and Illinois in 2016). The spousal impoverishment law sets minimum and maximum resources values that the community spouse can keep in addition to the institutional spouse's $2,000 allowance (this article abbreviates the institutional spouse's resource allowance as "ISRA" and the community spouse's resource allowance as "CSRA"). Assets that are exempt from treatment as resources include the community spouse's home, personal belongings and household furnishings, one vehicle, and certain other assets.

An Indiana community spouse can keep 50% of the couple's resources up to the maximum CSRA (the 2016 Indiana maximum is $119,220, a value that is increased sometimes by cost-of-living adjustment factors similar to Social Security retirement income increases). An Illinois community spouse's CSRA is the larger value of the Illinois maximum CSRA or the federal minimum CSRA, instead of keeping only half of the couple's resources up to that value (the 2016 Illinois maximum CSRA is $109,560, a value that is fixed by Illinois statute, and the 2016 federal minimum CSRA is $23,844, a value that is adjusted for cost-of-living sometimes like the Indiana maximum CSRA).

An Indiana community spouse can keep at least the federal minimum CSRA even if that value is more than 50% of the couple's resources (for example, a couple with resources worth $30,000 can keep $25,844 ($23,844 plus the $2,000 ISRA), because the minimum value is less than the community spouse's $15,000 one half share of the resources).

Community Spouse Income Allowance

The MCCA also protects a community spouse from poverty with a minimum income allowance (the 2016 minimum income allowance is $2,002.50). If the community spouse's countable income is less than the minimum income allowance, the community spouse can as much of the institutional spouse's income as it takes the community spouse to receive the minimum income allowance. For example, if the community spouse's countable income is $500 per month and the institutional spouse's countable income is $2,000 per month, the community spouse can keep $2,002.50 of the couple's combined monthly income.

To Be Continued

The second part of this article will describe Indiana spousal impoverishment record keeping requirements and important dates for Indiana married couples. We will also describe some basic concepts that elder law attorneys use to help community spouses remain financially secure by maximizing asset protection.

Jeff R. Hawkins and Jennifer J. Hawkins are Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyers and Jeff is a Fellow of the American College of Trust and Estate Counsel. Both lawyers are admitted to practice law in Indiana, and Jeff Hawkins is admitted to practice law in Illinois. Jeff is also a registered civil mediator and was the 2014-15 President of the Indiana State Bar Association.

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