Budget Law May Impoverish Seniors

The budget bill just passed by the legislature, and signed into law by the Governor, may have the effect of impoverishing seniors. Here is why.

Under current law, when either a husband or wife needs nursing home care, or care under the Connecticut Medicaid Home Care Program, the healthy spouse can keep $109,560 of assets. That in itself is not much to live on for the rest of your life, especially if you are in your 70’s when your spouse becomes sick.

Under the new law, the State will take a snapshot picture of your assets as of the date your spouse is institutionalized, and require you to reduce those assets to one half by spending them down, instead of saving them for yourself. For example, if you only have $150,000 of assets, you will have to spend $75,000, and will only have $75,000 left.

The math gets worse if you have less, because if you only have $80,000, you will have to spend down to $40,000. There is a bottom limit of $21,912 that the healthy spouse can keep no matter what, so if you have $40,000, you will not have to spend down to $20,000. That is not much consolation, however, if that is all you can keep to live on for years after.

The plain effect of this law is to hurt the most, the people with the least amount of assets. This is especially hard on those seniors who want to get Medicaid in their home, because Medicaid will only pay up to $5,600 per month for home care, and if the family needs to supplement that care with their own funds, they will have less funds to use for that purpose. And if the “healthy” spouse later needs care himself or herself, there will be fewer funds to pay for that care.

A great percentage of married seniors do not have the $219,120 it would take to be able to keep the maximum of $109,500, which is one half of $219,120, so it appears many seniors will feel the unwelcome effect of this unfortunate development.

If that were not enough, the new law increases the cost sharing (similar to a co-pay) for in home care from 6% to 7%. There was a proposal to eliminate completely the lowest level program for in home care, but that proposal was removed from the final bill.

Last, as a final twist of the knife, the new law reduces the amount that a senior in a nursing home can keep for personal needs, from $69 per month to $60 per month. That does seem over the top. This money is usually used for haircuts, small treats, cable TV, magazine and newspaper subscriptions, or replacing lost clothes. The only good thing that can be said is that Connecticut does have fairly good programs for in home care, compared to many states, but the ability to qualify has become more onerous. It is expected that the new requirements will be effective July 1, 2011, so if you need care, and assets are below $219,000, you should immediately take steps to see if eligibility can be gained by July 1.