Medicaid Treat Married Applicants
How does Medicaid treat married applicants?
As of 2020, an unmarried applicant may not have more than $2,349 in income and $2,000 in countable resources.The rules are different if the applicant has a spouse.
Suppose Joan is in the nursing home applying for Medicaid. In Medicaid terminology, Joan is the "institutionalized spouse." Her husband, Robert,is retired and still lives at home. Medicaid calls that the "community spouse".
The Texas Medicaid rules have special protections community spouse. These so-called spousal impoverishment rules allow the community spouse to keep more of the couple’s combined resources and income so they may continue to live out their lives “with independence and dignity.”
The “Spousal Protected Resource Amount”
The community spouse may keep half the couple’s combined assets up to a certain dollar amount, called the “Spousal Protected Resource Amount” or “SPRA.” The SPRA has both a minimum and a maximum range. For the year 2020, the minimum SPRA is $25,716 and the maximum is $128,640.
If the total assets are less than $25,716, the community spouse may keep everything. If one half of total assets equals less than $25,716, the community spouse may keep up half the combined assets up to $25,716. If one half of total assets equals more than $25,716, the community spouse may keep up to a maximum amount of $128,640.
- For example, if Robert and Joan only have $10,000 in countable resources, Robert may keep the entire $10,000.
- If Robert and Joan have $40,000 in countable resources, Robert may keep $25,716 because one half of the combined total is less than the minimum.
- If Robert and Joan have $200,000 in countable resources, Robert may keep $100,000, which is one half of the total but less than the maximum.
- If Robert and Joan have $300,000 in countable resources, the most Robert may keep is $128,640.
In certain instances, Medicaid allows the community spouse to keep more than the maximum SPRA. This is called “expanding the SPRA.” A Medicaid applicant is entitled to expand the SPRA when their combined income is below a certain amount. In such cases the community spouse may keep more assets to make up for not having enough income. This is explained in more detail below.
The “Minimum Monthly Maintenance and Needs Allowance”
In addition to the SPRA, the spousal impoverishment rules state the community spouse must receive minimum amount of income per month. This is called the “Minimum Monthly Maintenance Needs Allowance” or “MMMNA.”For 2020, the MMMNA is $3,216 per month.
In other words, the community spouse is entitled to income of at least $3,216 per month. If the community spouse’s income falls short, the institutionalized spouse is allowed to give whatever amount of her income is necessary to bring the community spouse’s income up to $3,216. The amount the nursing home spouse can give to the community spouse is called the “spousal diversion”.
- For example, if Joan’s income is $1,500 and Robert’s income $2,500, Joan may give $716 ($3,216 - $2,500) a month to Robert. The remainder of Joan’s income ($784) would go to her nursing home co-payment and any allowed deductions.
In some cases, the institutionalized spouse’s income is so low that, even with the spousal diversion, the community spouse’s income falls short of the MMMNA. When that happens the institutionalized spouse can give their entire income (less any allowed deductions) to the community spouse and the nursing home co-payment will be $0.
- For example, suppose Joan’s income is $750 and Robert’s income is $1,500. Robert is short of the MMMNA by $1,716 ($3,216 - $1,500). That is more than Joan’s entire income. Joan may give Robert her entire income, less any allowed deductions, every month. Joan’s nursing home co-payment is $0.
Keeping More Assets
As mentioned above, the couple’s income also controls how much of their assets they can keep. If the community spouse’s income is below the MMMNA even after the spousal diversion, the community spouse may keep more of the couple’s assets or “expand the SPRA.”
But it is unreasonable to expect the community spouse to return to work just to generate enough income to meet the minimum. Instead, Medicaid allows the community spouse to keep an amount that, if invested, would generate enough annual income to make up the shortfall. The investment amount is determined by how much the community spouse would need to invest in a 12-month CD to generate enough interest to make up the difference.
- For example, let’s use the scenario above but now assume Robert and Joan have $300,000 in countable resources. Under the normal SPRA, Robert may only keep $128,620. But Robert’s income is $1,716 below the MMMNA even after Joan’s spousal diversion. Robert is entitled to expand the SPRA to an amount that, if invested in a 12-month CD, would generate income of $20,592 a year ($1,716 x 12).
As most people know, a 12-month CD does not generate a high return. Some CD rates in Texas are as low as 1.5 percent. That means Robert would need to invest over $1.3 million ($20,592 * 100 / 1.5) in a 12-month CD to generate enough income to make up for his $20,592 shortfall.
The couple’s combined assets are obviously far less than $1.3 million. This means Robert may keep all $300,000 of their assets, Joan is financially eligible for Medicaid, and her nursing home co-payment is $0.
Keep More Assets with the Help an Experienced Elder Law Attorney
The examples provided above are for illustration purposes only and are not legal advice. The spousal impoverishment rules are set by the Texas Health and Human Services Commission and subject to change at least annually. The spousal impoverishment rules are complex and contain many exceptions and exemptions. You should not attempt to calculate these amounts for your loved one without consulting with an attorney. A mistake could result in months of delay and thousands of dollars in unnecessary nursing home charges. Contact an experienced Elder Law Attorney at the Michels Law Firm to see if you can take advantage of these rules.