What a “Community” Spouse Can Keep

When one spouse needs long term care, at home or in a nursing home, the other spouse is termed the “community spouse.” Then the Medicaid rules set out what the “community spouse” can keep for income and assets. The intent of the laws and regulations is to allow the community spouse to have enough income and assets so that he or she has enough income and assets to continue to live at home, whether that be a home, an apartment, or other living place.

For income, the community spouse is entitled to have a minimum monthly maintenance needs allowance (MMMNA) which is a dollar figure that changes each year. It is currently $2,288.75. What that means is if the healthy spouse only has income of $1,000 a month, Medicaid rules allow a diversion of the sick spouse’s income of the difference, or $1,288.75 per month to the healthy spouse.

Assets can also be protected for the community spouse. The family home is totally exempt if it is put in the name of the healthy spouse, up to the value of $955,000. That number changes yearly, and for families in this area of Connecticut, the family home rarely exceeds that value. Or, if the sick spouse is approved for Medicaid, the healthy spouse can sell the home, and keep the money, or buy a new house, or downsize to a smaller house or a condominium.

The community spouse can also keep up to $137,400 in investment assets. If the investment assets exceed that amount, there are various “spend down” rules that effectively allow the average community spouse (not multi millionaires) to keep their life’s savings. For example, money can be spent on house expenses or improvements. A new car could replace that 20 year old one many of our clients still personally own.

There is also a method to increase the amount of assets that can be diverted from the sick spouse to the community spouse in order to generate enough income for the healthy spouse to live on, up to a maximum of $3,435 per month.

A federal court case decided years ago made clear that a community spouse could also purchase what is called a Single Premium Immediate Annuity with money that exceeds the maximum protected amount of $137,000. So in theory and in practice, the community spouse could in most cases save and protect all their life’s savings by purchasing that kind of annuity. But there is a potential downside because if the healthy spouse dies before the sick one, and that certainly can happen, the balance of the annuity must be paid to the state to reimburse it for the money it has paid out for the sick spouse’s care. That means careful thought must be given before blindly buying that Single Premium Immediate Annuity, as it could result in a huge loss.

One positive rule is that personal property does not count. That doesn’t mean a spouse can go out and buy the Hope diamond, but that all kinds of personal property, such as home furnishings, decorations, silverware, and any personal property will not count against the asset limit for Title 19. Then, if the community spouse has done a proper will with a trust inside it, the property can substantially be saved if the community spouse dies before the one needing Medicaid.

Anyone faced with care needs for a sick spouse should get full and complete advice on how best to use the laws to protect their life’s savings.