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Should I Spend Assets, so Spouse’s Nursing Home Stay Is Covered by Medicaid?

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MarketWatch’s recent article entitled “Do I have to spend my assets before Medicaid will pay for my spouse’s nursing home?” cautions that the rules for Medicaid coverage of nursing home care are very complicated. Medicaid is the federal-state safety net program for healthcare, and it pays for nursing home care.

However, to qualify, nursing home residents must prove that they’re impoverished under Medicaid’s rules. These rules are different in each state.

In Rhode Island, to be eligible, the nursing home residents must have “countable” assets of fewer than $4,000. Almost all assets are counted against this limit except for the resident’s home, which isn’t countable provided its fair market value (less any mortgage) is less than $955,000 (in 2022). (In some states, this limit is $636,000.)

If the nursing home resident is married, their spouse — known as the “community” spouse — is limited to $137,400 (in 2022) in countable assets. This is known as the community spouse resource allowance or “CSRA.” Note that in some states, the limit is half of whatever assets the couple owned when the ill spouse moves to a nursing home up to the cap of $137,400.

The process of spending down is spending savings until the couple’s assets are below the combined limit of $139,400. This spending can be for anything that benefits either spouse, whether it involves paying off debts, such as a mortgage or line of credit on the house, fixing up the house, buying a car, or even the healthy spouse taking a much-needed vacation.

The only thing they can’t do is give the money away. The sooner a couple spends down, the sooner the nursing home spouse will qualify for Medicaid coverage and the sooner they’ll be able to stop paying the nursing home out-of-pocket.

As is often the case with Medicaid planning, the best strategy may be different in different situations. Consult with an experienced Rhode Island elder law attorney.

Reference: MarketWatch (Oct. 22, 2022) “Do I have to spend my assets before Medicaid will pay for my spouse’s nursing home?”

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