Good News For Seniors Regarding Nursing Home Care
Last week the Second Circuit Court of Appeals in New York ruled in favor of a Connecticut wife, Amelia Lopes, whose husband is in a nursing home. This case was titled Lopes vs. Starkowski, who was the Commissioner of the Department of Social Services. Her assets had exceeded the then allowable limit by about $160,000. It is all the money she had to live on for the rest of her life. The court ruled that under Federal and State law, it was permissible for her to buy an immediate annuity with her money, to be paid to her in equal monthly installments over her expected life span, and then the money would no longer be counted as an asset. If it was counted, it would make her sick husband ineligible for Title 19.
Here are the rules. If your spouse is in a nursing home, or requires care at home, and needs Medicaid (Title 19) to pay for those services, the healthy spouse can keep the following assets: family home, car, prepaid funeral contracts, and personal property, and one half the remainder, but not more than $113,640. The court ruling allows the healthy spouse, in most circumstances, to take money that exceeds the protected amount, and buy an immediate annuity, thereby converting the money into an income stream, which is no longer counted as an asset. This is very good news for seniors, because it means the healthy spouse will not be impoverished, and can keep more funds to live on for the rest of his or her life. This is very important because often healthy spouses survive for years after the death of the sick spouse, and they need every penny to avoid becoming impoverished.
The rules are strict, however, because the healthy spouse must name the State of Connecticut as the primary beneficiary of the annuity, in case the healthy spouse dies before the sick spouse. In addition, there are several other technical requirements that must be met, or the assets will not be protected.
The annuity must be an “immediate” annuity and must have equal payments for as long as it lasts. In addition, it must be actuarially sound, which means it must be totally payable within the healthy spouse’s expected life span. If you are faced with the need for care for your husband or wife, or if your parents are facing that need, it is imperative that you seek the advice of a knowledgeable elder law attorney who can evaluate your assets, plan the most beneficial way to proceed, and protect those assets that are needed for the healthy spouse to live out her remaining years. This court decision allows a husband or wife to do last minute planning so that the surviving spouse is not impoverished.
There are also other planning techniques, to complement this special immediate annuity, and those should also be evaluated with competent counsel. As I said in this column over a year ago, it’s better late than never. This is good news for seniors.