PROTECTING THE COMMUNITY SPOUSE

Spousal Impoverishment (protection of income and assets):

The term “spousal impoverishment protection” refers to special provisions in federal and state Medicaid laws that affect certain married people receiving long term care services. The protection applies to people age 65 or older and adults with disabilities.

Spousal impoverishment protects two major areas:

-- Assets. The way a couple’s assets are counted and allocated between the spouses in determining Medicaid eligibility.

-- Income. The amount of income that can be transferred from one spouse to another.  Spousal impoverishment protections apply only when one spouse is in a nursing home or receiving long-term care services and the other is not residing in a medical institution.  These protections help to prevent the community spouse from being impoverished by his or her spouse’s institutionalization.

Protecting the Community Spouse

Often one spouse will qualify for Medicaid benefits while the well spouse remains at home. The well spouse will be entitled to retain a spousal allowance (CSRA) of up to $92,760 and certain other Exempt Assets(e.g., the home).

However, if the well spouse predeceases the nursing home spouse and leaves everything to the nursing home spouse directly, Medicaid eligibility is threatened. In essence, Medicaid will require this bequest to be spent down to less than $2,000 before re-qualifying for Medicaid benefits.  

We strongly suggest updating your estate plan to provide for "Testamentary Spousal Special (Supplemental) Needs Trust" trust provisions and/or alternate distribution to protect these assets in the event the well spouse predeceases the nursing home spouse.