San Antonio Express-News MySA.com Copyright 2011, Paul Premack
August 19, 2011
should be an integral part of Medicaid Planning (Part 1)
Dear Mr. Premack: My wife has been gradually getting worse
dementia, and I’ve finally had to place her into a nursing home. Her care
costs over $5000 each month, and while we are not entirely without
resources, this is far beyond what we can afford. We have about $200
thousand in savings, our home is paid off, and between us we have about
$2800 each month income. She named me as agent in a durable power of
attorney last year, and we each have Wills leaving everything to each
other. Is there any way that we can qualify for help to pay the nursing
home bill? – T.R.
There are only three ways to pay for the medical
care your wife needs. First, you can pay from your own income and assets,
which is honorable and in fact necessary. Second, you could have purchased
long-term care insurance, which would then be obligated to pay for a
portion of her nursing home care. Third, you can seek taxpayer assistance
Your wife does not qualify for Medicaid. Yet. If
you keep spending your money on her care, the assets you have will
eventually sink to a level where Medicaid would provide assistance. Using
an intelligent strategy as you spend your funds is the best way to 1) save
as much of your own funds as is legal, and 2) qualify her for assistance.
Medicaid’s rules do not require that you have no assets. In fact, the
rules provide a “spousal protected resource allowance” (SPRA) equal to
one-half of the countable resources (but not more than $109,560). Any
person who has resided in a nursing home for more than 29 days can apply
for Medicaid or seek a SPRA assessment. Here is an example to clearly
illustrate the rule:
You have $200,000 in countable resources
(your house, car and personal effects are not countable). You have
$2800/month income, nursing home costs of $5300/month and let’s assume you
pay $2000/month for your own food, utilities and living expenses. Your
wife has lived in the nursing home more than 29 days. That means you have
been (and will be) taking $4,500 out of savings every month to pay the
bills, and in just two years your savings will decline to $92,000.
You go apply for Medicaid at the end of that two year period. Their rules
say one-half of the countable resources are set aside for you as protected
(i.e., $46,000). Your wife is credited with the other half, and before she
qualifies for Medicaid her half must be spent down to $2000. Ten months
later you go back to Medicaid, reapply, and she is approved. You keep your
house, car, personal effects and $46,000.
What if you take a different strategic approach? Do not wait two years to
speak to Medicaid, even though you know your wife does not yet qualify. Go
talk to them today about benefits. You’ll report that you have $200,000 in
countable resources, and they’ll tell you that one-half is set aside for
you as protected (i.e., $100,000). Your wife is credited with the other
half, which must still be spent down before she qualifies for Medicaid.
However, instead of spending all of her half on the nursing home, you 1)
buy prepaid funeral plans for both of you, 2) repair and upgrade you home,
3) buy a new reliable car, 4) take a trip, and 5) pay for needed legal
services. Whenever her half gets down to $2000 you reapply for Medicaid
and she is approved. You keep the rejuvenated house, the new car, the
personal effects and the $100,000. A much better outcome for you, which is
still completely within the law and the rules.
The strategy does
not end there. You must rearrange the ownership and disposition of your
remaining assets. Next week’s column will address the changes you must
make to your Will and to your asset ownership in order to provide
Disclaimer: This column answers a specific
legal question asked by an individual in Texas. The answer may or may
not match your individual situation. Be careful not to treat this
column as specific legal advice, as it may not meet your individual
needs. It may give you a solid basis for discussion with your own
You should consult with your personal
attorney before you take any action on this or any legal issue.
Also, please be aware that laws change, so this column is valid only
as of the date it was published. This communication does not create an
attorney-client relationship between the author and the reader.
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Paul Premack is Certified as an Elder Law
Attorney ( CELA ) by the National Elder Law Foundation as accredited by
the Texas Board of Legal Specialization and tthe ABA. He is licensed to pracice law in Texas.
Benjamin Premack holds a JD and a Masters Degree in International
Affairs, and is licensed to practice law in Washington State and in