A Possibly Big Break for Seniors

There is a potentially big break for seniors just passed by the legislature but not yet signed by Governor Rell. It also needs federal approval, so it won’t be final until the federal government approves, but other states have allowed this method in the past, so there is good reason to believe it will go through.

The legislature recently passed Public Act 10-73 and sent it to the Secretary of State on May 18. Governor Rell has not yet signed the Public Act into law, as there is some internal debate between the Department of Social Services, the Office of Management and Budget, and the Governor’s office. In Connecticut, if the Governor does not sign, then 15 days later it will automatically become law. That means June 1 the law will be in force, unless sooner signed. Of course it could be vetoed, but that would be a disservice to seniors with sick spouses. Here is the significant change.

Up to now, if you had a spouse in a nursing home, or needed Title 19 (Medicaid) at home, you could keep your house and car and pre paid funeral contracts and certain other assets, but would be required to spend down your countable assets to one half of what they were on the day your spouse became institutionalized, but not more than $109,560. So if you had $220, 000, you could keep $109,500, and had to spend the rest. But if you only had $80,000, you would have to spend down to half, or $40,000. That was particularly hard on the people with the least money. Forcing a 75 year old wife with a sick husband to live on as little as the minimum of $21,912 for the rest of her life is quite unfair. Some states, in years past, realized the inequity in this formula and allowed everyone to keep the maximum community spouse protected amount, but Connecticut never changed. The new law says that no matter what, you can keep up to $109,560, above and beyond the exempt assets.

Not only will this be a great help financially to the seniors who have the fewest assets, but it will simplify the Title 19 application process. The healthy spouse will no longer have to figure out ways to spend down below $109,560, and the application process should be easier.

This does not mean that careful planning should not be done, because there are many other variations on eligibility rules if your spouse needs homecare or nursing home care. For example, if your spouse must go on Title 19, you may be able to keep any IRA’s in your name, by following new rules that allow you to annuitize your IRA. As always, the best way to ensure that you can get the care you need, and keep the most assets allowed, is to seek the advice of a competent elder lawyer attorney. The rules for Medicaid eligibility are ever changing, and it is vital to keep abreast of the latest changes. Let’s hope this sensible change is signed by the Governor or becomes law without her signature.

That is our word to the wise for this week.