07 Oct 2020 PROJECTED MAXIMUM RESOURCE LIMITS FOR SPOUSAL MEDICAID (HOW TO KEEP MORE FOR SPOUSE IF ILL SPOUSE NEEDS TO GO INTO NURSING HOME OR NEEDS CARE AT HOME)
As we live longer, there is a greater likelihood of disability and the need for long-term care. However, most Americans have inadequate resources or income for such care and also lack long-term care insurance or similar insurance products. As a result, some elderly and disabled seek public benefits (such as Medicaid) to help defray such cost. However, the government looks at the applicant’s resources as entitlement to such benefits are “means-tested” prior to the government paying for benefits. Annual increases to the maximum protected resource amount (the maximum amount the well spouse, hereinafter the “community spouse”, can keep – although this amount can be expanded) are tied to the Consumer Price Index for all urban consumers. It is projected (based on such index increase of 1.6%) for year 2020 that the maximum protected resource limit for the spouse of a long-term care Medicaid applicant will be $128,580 (presently $126,420) and the minimum protected resource amount for the community spouse will be $25,716. The actual amount has not yet been published.
As many of you know, when one spouse lives in a nursing home in a Medicaid bed and applies for nursing home Medicaid (the “institutionalized spouse”) and one spouse lives at home or in the community (the “community spouse” as mentioned above), the Texas Health and Human Services Commission (HHSC), which governs Medicaid eligibility, takes a snapshot of the couple’s countable resources (some examples of non-countable resources are pre-need funeral arrangements with a waiver of right to cancel, homestead presently with an equity limit of $585,000 if single, one car, etc.) as of the first day of the month in which the institutionalized spouse receives at least 30 days of continuous skilled care. HHSC looks at the first day of that month as the date to determine the protected resource amount (“PRA”) for the community spouse. This is the amount of countable resources that can be kept by the community spouse if there is no expansion as explained below.
Although the projected maximum protected resource for 2020 is projected to be $128,580, the community spouse can often expand the PRA if the non-countable resource income of the couple is less than the minimum monthly maintenance needs allowance (MMMNA) which is presently $3,160.50 and is projected to rise to $3,214.50 as of January 1, 2020. Thus, the non-countable resource income (typically Social Security or a pension) of both spouses must be below the MMMNA (presently $3,160.50 per month) for there to be a possibility of expansion. Therefore, if the non-countable resource income of the couple is below the MMMNA, often the couple might have hundreds of thousands of dollars and still be eligible for Medicaid (notwithstanding the $128,580 “maximum” limit) since more resources are needed when interest rates are low to have adequate income up to the allowable limit. On January 1, 2020, the minimum protected resource amount (the minimum amount of resources that can be kept if the couple’s non-countable resource income is above the MMMNA) is projected to rise from $25,284 to $25,716. These are numbers that most elder care attorneys follow very closely.
To determine the PRA, calculate the couple’s countable resources and divide that number by two. The result is the PRA – unless it is above the maximum PRA (projected to be $128,580 as of January 1, 2020) or below the minimum PRA (projected to be $25,716 as of January 1, 2020). Thus, HHSC would allow the community spouse 1/2 of the couple’s countable resources as of the snapshot date unless it is above the maximum PRA or below the minimum PRA if the couple’s income is greater than the MMMNA.
For example, if the couple has $30,000 of countable resources and the monthly non-countable resource income of the couple exceeds $3,214.50 (the projected MMMNA in year 2020), then since $30,000 ÷ 2 = $15,000 is less than the minimum PRA, the PRA that could be kept by the community spouse would be at least $25,716 (projected for 2020) in addition to the $2,000 that could be kept by the institutionalized spouse for a total of $27,716. The remaining $2,284 would have to be “spent down” by paying debts, buying non-countable resources or making exempt transfers. The PRA could be expanded (in which case all countable resources might be able to be kept by the community spouse without any change to such resources) if the non-countable resource income is less than the MMMNA – which is permitted due to spousal prevention from impoverishment laws (the government does not want to encourage divorce). More countable resources can be kept if income is lower.
Similarly, if a couple has $500,000 of countable resources and non-countable resource income of greater than the projected $3,214.50 per month, then since $500,000 ÷ 2 = $250,000 which is greater than the maximum PRA of $128,580 (projection only), the PRA would be $128,580 and $371,420 ($500,000 – $128,580) would need to be “spent down” prior to Medicaid eligibility (buying exempt resources, payment of bills, make certain exempt transfers, etc.). The institutionalized spouse can keep $2,000 in addition to that amount.
However, if the non-investment or non-countable resource income of the couple is less than the MMMNA (anticipated to be $3,214.50 in 2020) there often can be expansion of the PRA. Thus, in the example above, in certain cases a couple might have $500,000 or more of countable resources and the institutionalized spouse could still achieve Medicaid eligibility and the community spouse could keep all $500,000. Since interest rates are very low, often more can be protected than ever before at the present time. More countable resources can be kept is income is lower.
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