06 May SUCCESS STORY OF THE MONTH – THERE IS ALWAYS “PLAN B”
Wife needs long-term care which is very expensive (statewide average is around $6,500 per month). Medicare has very limited coverage and has been utilized to the limits resulting in husband having to private pay with his limited resources which he needs to use to take care of him for the remainder of his life. Husband would like Medicaid to pay for his wife’s care. However, since their combined noncountable resource income (typically Social Security or a pension) exceeds a limit of $3,216.50 per month, they have too much countable resources for immediate eligibility for the government to help pay for the cost of care. When a couple’s gross monthly noncountable resource income exceeds that amount, the maximum protected resource limit for the couple is $128,640 of countable resources. The state looks at the total countable resources (certain resources such as a homestead, car, pre-need funeral, personal property items, certain IRAs, etc. do not count) as of the date of the first day of the month of the ill-spouse’s institutionalization and divides that amount by 2, not to exceed $128,640. So, for example, if the client has $300,000 of countable resources as of the date of institutionalization, there will not be eligibility until the couple’s countable resources are below $128,640 (since $300,000 ÷ 2 = $150,000 and the maximum protected resource amount is $128,640).
In our case, the married couple has $100,000 in cash and the husband has a 1/3 interest in a co-op (his interest is worth $200,000) with his two siblings (separate property is countable since Medicaid is based on federal laws – not state community property laws). So, let’s say wife was institutionalized in April. Thus, until the resources are below $128,640 (if the interest in the co-op is countable – the property is in a state where are a co-op is more common), there would not be Medicaid eligibility until the first day of the month where the couple’s resources are below $128,640. The original plan was to simply place husband’s interest in the co-op (valued at $200,000) up for sale. Under the Medicaid rules, real estate placed for sale does not count as a resource (unless sold) and they look at the date that the real property is placed for sale. Resources are determined as of the first day of each month at 12:01 a.m. Thus, if the interest in the co-op was countable as of April 1, but then subsequently put up for sale later in April, the client would be below the resource limit of $128,640 by May 1 since $300,000 of countable resource as of April 1 minus $200,000 (now exempt since placed for sale) = $100,000 (which is less than $128,640) accomplishing the spend-down without spending a dime.
However, the husband’s two siblings would not agree to put his interest up for sale. In order to sell a co-op, it is required that all owners place their interest for sale . The siblings are not willing to either sell their interest, put their interest for sale or buy their brother’s interest in the co-op thwarting the original desired plan. So, does that mean there would never be eligibility since his interest ($200,000) in the co-op exceeds the maximum resource limit?
As a result, the client had to resort to Plan B. Medicaid does not penalize an applicant (which includes the applicant’s spouse) who cannot place the property for sale without the cooperation of others. Thus, with adequate proof that the requirement of all owners were needed to place the real property interest for sale and with proof of the failure of the siblings failing to cooperate to place the property for sale, the interest in the co-op will not count as a resource under Medicaid rules. The only difference is the need to spend-down. So, if the other countable resources were $100,000, there would not be eligibility until the countable resources are less than $50,000 ($100,000 ÷ 2) since the interest in the co-op would not count as a resource as of the snapshot date of April 1 in this example. This can easily be accomplished by merely paying down the mortgage since the homestead is exempt. There are numerous other ways that spend-down can be accomplished So, if Plan A doesn’t work, usually there is a Plan B.
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