Planning for Spousal Support When Partner Enters Nursing Home

When a spouse requires nursing home care, the emotional toll can be overwhelming. Adding financial uncertainty into the mix makes the situation even more challenging. The high costs of nursing homes—often exceeding $14,000 per month in Berks County, Pennsylvania—can quickly deplete savings, leaving the healthy spouse in financial jeopardy. Medicaid planning offers solutions to safeguard assets and ensure both spouses maintain their quality of life during these difficult transitions.

The Financial Impact of Nursing Home Care

Nursing home care represents one of the most significant potential expenses for families. Without proper planning, the costs can quickly drain retirement savings, leaving the healthy spouse without sufficient resources. Many families turn to Medicaid for financial assistance. However, eligibility requirements can be complicated, particularly when one spouse remains home.

Medicaid's spousal impoverishment rules were designed to prevent healthy spouses from becoming destitute when their partner enters a nursing home. Understanding these rules is crucial to protecting your assets and securing both partners' support.

How Medicaid’s Spousal Impoverishment Rules Work

Under Medicaid, the spouse who remains at home is referred to as the "community spouse," while the partner in the nursing home is the "institutionalized spouse." Medicaid allows the community spouse to retain a portion of the couple’s combined assets and income to ensure that they can continue to live independently.

Asset Protections

Medicaid divides a couple’s assets into two categories:

• Countable Assets: These include bank accounts, investments and vacation homes.
• Exempt Assets: A primary residence, the retirement account(s) of the community spouse, one vehicle and personal possessions are generally exempt.

As of 2024, the community spouse may keep up to $148,620 in countable assets, though this figure varies by state. To qualify for Medicaid, the institutionalized spouse must reduce their countable assets to below somewhere between $2,000 and $8,000, depending on the circumstances.

Income Protections

Medicaid allows the community spouse to retain some of the couple’s income. This is known as the Minimum Monthly Maintenance Needs Allowance (MMMNA), which ensures that the community spouse has enough income to cover living expenses. In most states, the MMMNA ranges between $2,465 and $3,715 per month, depending on local costs of living.

Strategies to Protect Spousal Support

Navigating Medicaid eligibility and asset preservation requires careful planning. An elder law attorney can help you implement strategies to secure financial stability, while meeting Medicaid requirements.

Spousal Refusal

In some states, the community spouse can refuse to use their assets to pay for the institutionalized spouse’s care. This strategy, known as "spousal refusal," shifts financial responsibility to Medicaid, while allowing the community spouse to retain more assets.

Asset Transfers

Couples can transfer ownership of certain assets to the community spouse to meet Medicaid’s asset limits.  There are techniques that are used by elder law attorneys the can possibly protect almost 100 percent of the couple's assets for the community spouse.  If there is no spouse, an elder law attorney may be able to protect 50 to 60 percent of the institutionalized individual's assets for his or her children/heirs.  These techniques, obviously, avoid the spenddown requirements if you go through the nursing home to apply for Medicaid.

Use of Trusts

Establishing a Medicaid Asset Protection Trust can shield assets from Medicaid’s countable resources. Once assets are transferred into the trust, they are no longer considered part of the couple’s estate. This allows the institutionalized spouse to qualify for benefits, while preserving resources for the community spouse.

Paying Down Debt or Purchasing Exempt Assets

Using savings to pay off debts or purchase exempt assets—such as home repairs or a new vehicle—can reduce countable assets while benefiting the community spouse. This strategy ensures that resources are used to enhance quality of life rather than being spent unnecessarily.

Planning for Peace of Mind

Proactive planning is key to navigating nursing home care and Medicaid eligibility. Waiting until a crisis arises can limit your options and lead to unnecessary financial hardship. By consulting an elder law attorney early, couples can create a long-term care plan that aligns with their goals and protects their financial future.

Medicaid planning isn’t just about meeting eligibility requirements—it’s about ensuring that both spouses maintain their dignity, independence and quality of life. Taking the time to understand your options now can prevent financial strain later.

Key Takeaways

• Financial Planning is Essential: Long-term care costs can deplete savings quickly, making Medicaid planning essential for spousal support.
• Special Medicaid Rules: Medicaid’s spousal impoverishment rules protect the community spouse by allowing them to retain a portion of assets and income.  Elder law attorneys have techniques to protect assets for the family and qualify the institutionalized spouse for Medicaid.
• Meet Medicaid Eligibility: Asset transfers, trusts and strategic spending can help couples meet Medicaid eligibility, while preserving resources.
• Start Planning Now: Early planning provides both spouses the most flexibility and financial security.
• Call an Estate Lawyer: Consulting an estate lawyer ensures compliance with Medicaid rules and maximizes asset protection.

Reference: Paying for Senior Care (Jan. 17, 2024) “What Happens When My Spouse Enters a Nursing Home?”