You may already be in a Medicaid Spend-Down

If you are married, and you or your spouse has been in the hospital and/or rehab and/or nursing home for more than 30 consecutive days, you may already be in a Medicaid spend-down for long term care coverage.  And you don’t even realize it!

Let’s start with a discussion of the amount of savings or assets that the “well spouse” can keep when the “ill spouse” asks Medicaid to pay for his or her long term care.  By savings or assets, I mean what is left at the end of the month after income is received and bills are paid.  Medicaid labels savings and other assets as “resources.”  The amount of resources that the “well spouse” can keep at the time the “ill spouse” gets Medicaid coverage is called the Community Spouse Resource Allowance, commonly abbreviated to CSRA.

For most couples, the CSRA is half of the assets at the time the “ill spouse” had to move out of the house for medical reasons and stayed out of the house for 30 days or more.  The first day of the month during which the “ill spouse” moved out is called the “snapshot date.”  (That’s not the official terminology, but I like that term because it’s the most descriptive of what happens.)

Please realize that, on the “snapshot date,” the “ill spouse” is almost always still at home and may not realize that, before the month is over, he or she will be out of the house for medical care and/or custodial care for an extended period of time.  (The “ill spouse” is out of the house on the “snapshot date” only if the “ill spouse” becomes ill or gets injured on that first day of the month.)  The “snapshot date” on the first day of the month seems illogical because, most of the time, nothing medical happens on that day.  It’s logical only when you realize that Medicaid works in whole months.  It’s just too difficult to break financial records down into individual days.

If the couple had less than $47,688 on the “snapshot date,” the “well spouse” will be allowed to keep more than half of the resources because the “well spouse” is allowed to keep the first $23,844 of resources as the minimum CSRA.  (Unfortunately, if the couple has less than $23,844, Medicaid will not give money to the “well spouse” to bring him or her up to the minimum.)

If the couple has more than $238,440 in resources, the “well spouse” will not be able to keep a full half because the maximum CSRA is $119,220.  Any resources above the “well spouse’s” $119,220 will be attributed to the “ill spouse.”

Note:  The minimum and maximum CSRA are adjusted each year for inflation (if there is inflation.)  The Medicaid page at ProtectingSeniors.com is updated from time to time with these amounts and other related Medicaid eligibility figures.

If the couple has between $47,688 and $238,440, the CSRA is half of the resources.

Note:  Some assets, most notably the couple’s home, are not counted in “resources.”

So, after all that, the “ill spouse’s” resources at the time he or she asks Medicaid for help is the couple’s total resources above the CSRA (that the “well spouse” gets to keep) and the $1,500 that the “ill spouse” gets to keep (expected to become $2,000 in July 2016.)  All of the couple’s resources above the CSRA plus $1,500 must be spent-down before Medicaid will cover the “ill spouse’s” expenses for long term care.

So, why does all this minutia mean that someone might already be in a spend-down.  It matters because the “snapshot date” isn’t tied to long term care.  It’s tied only to the “ill spouse’s” absence from the home for medical reasons for at least 30 days.  The “snapshot date” from an injury or illness earlier in life (but still during the marriage) may be useful to save assets if the “ill spouse” later needs long term care.

I know, you’re still confused.  That last paragraph didn’t help, did it?  (Some people would describe that as a good lawyer’s answer:  entirely correct but completely incomprehensible.)  So, let’s tell this with a story.

For the rest of this discussion, I’m going to give names to the “ill spouse” and the “well spouse” in hopes of keeping further confusion to a minimum.  So, the “ill spouse” is going to be Ward, and the “well spouse” is going to be June.

Ward dropped a cleaver (sorry, couldn’t resist) on his foot 10 year ago, on January 6.  He needed surgery and several weeks of rehab.  He returned home on February 5 .  (As long as he was out for 30 days, additional days don’t matter for this discussion.)  Let’s say that Ward and June had $100,000 in resources on January 1 ten years ago (the “snapshot date” for his foot injury.)

Ward recovered and returned to work.  He continued to make money, and their savings grew.

So, now, 10 years later, Ward has a debilitating stroke.  June can’t take care of him by herself and needs to move Ward into a nursing home.  (By the way, this scenario also applies to home care and to assisted living.)  June would like to apply for Medicaid to help pay for Ward’s care.  At the time of Ward’s stroke, they have $200,000 in resources (on the first of the month.)

Based on the $200,000 in current resources, Ward would have to spend-down $98,500 (the amount left after half of $200,000 is reserved for June and $1,500 is reserved for Ward) before Medicaid will pay for Ward’s care.

BUT, Ward has already had a “snapshot date.”  Ten years ago, he was out of the house for medical reasons for at least 30 days.  At that time, he and June has $100,000 in countable resources.  As a result, Ward needs to spend down only $48,500 to get Medicaid coverage to pay for his nursing home stay after the stroke.  June was allowed to keep $150,000 rather than $100,000.  BIG DIFFERENCE.

Note:  The “snapshot date” resulting from Ward’s cleaver accident applies only to Ward’s future need for long term care.  If June, rather than Ward, has the stroke, the earlier “snapshot date” doesn’t apply.  Now, if June had a significant illness or injury of her own that resulted in her own medical stay out of the house for at least 30 days at some point in the past, that would create her own snapshot date.

So, if you’ve stuck with me during this 1,000 word shaggy dog story, here’s the payoff:

If you know a couple (maybe you and your spouse) in which one of them has had a 30 day stay out of the house for medical reasons, the couple should preserve all of their financial records from that time.  (For example, bank statements, investment statements, real estate values, IRA statements, life insurance cash values, and annuity statements.)  Those records might be very valuable in case the same person needs long term care in the future.

Boy, that installment was about as difficult to follow as War and Peace.  Sorry about that.  I couldn’t find a way to make it any simpler.

 

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