September - October 2018

Written by Chad Eichorn
From his column Elder Law

elder-law-09-18_article.jpgThe decision to move a spouse into a nursing home is one many couples have to face. It’s a misconception that if one spouse needs long-term residential care, it will bankrupt the spouse remaining at home. This doesn’t have to happen. Taking time to prepare in advance can alleviate some of the stress and uncertainty that comes with this process. Here’s an overview of the details regarding long-term care.

Will we lose all of our assets?

Many spouses come to us with this question. In one situation, an elderly woman was leaving our office to attend an interview for a retail clerking job to support herself after her husband moved to a nursing home. The answer, thankfully, is “No, you will not lose all of your assets.”

Legislative Help

The Spousal Impoverishment Law is intended to allow the community spouse to protect a portion of income and resources so that he/she can live life with independence and dignity.

Nursing homes are expensive, often costing more than $8,000 a month. Expenses like this can rapidly deplete the life savings of an elderly couple, leaving the spouse at home with nothing to live on. However, in 1988, Congress enacted the Spousal Impoverishment Law (SIL—also known as Division of Assets). SIL works within the guidelines of Medicaid, which supplements the costs of the nursing home. As such, it requires that a portion of the funding for nursing home care come from the assets of the individual or couple involved. SIL is intended to allow the community spouse (the one remaining at home) to protect a portion of income and resources so that he/she can live life with independence and dignity.

Definition of Assets

Exempt Assets: Under SIL, certain assets are exempt and may be kept by the spouse at home. These include: the home; one car; personal possessions, such as wedding rings and clothes; and funeral plans.

Countable Assets: All other assets are countable, whether owned by the husband or wife or held jointly. These include checking accounts, savings accounts, stocks, bonds, CDs, mutual funds, revocable trusts, cash value of life insurance policies, IRAs, and real estate (other than the home).

Under SIL, the spouse at home gets to keep half of all countable assets, up to a maximum of $123,900 in 2018, but not less than $25,000.

Income

In addition to assets, the community spouse gets to keep his/her own income. If that income is less than approximately $3,000 per month, the spouse at home may also keep part of the nursing home spouse’s income, up to a maximum of $3,090 per month.

Here’s an illustration: Ellen can no longer care for her husband, Bob, who has been admitted to a nursing home. They have $200,000 in countable assets. Ellen will be able to keep $100,000 of the assets, in addition to their home, one car, and prepaid funerals.

Ellen and Bob are both on Social Security with no other source of income, other than that from investments. Ellen receives $1,500 from Social Security; Bob receives $1,600. Ellen will be able to keep her own income and $1,590 of her husband’s income, so that her total monthly income will be $3,090.

It is important to remember that Medicaid law is state specific, so details regarding SIL vary according to where you live. If you have questions about these issues, please contact an Elder Law attorney licensed in your state. You can learn more about SIL at this link.

Chad Eichorn is an attorney licensed in Iowa only. This article is provided as legal information only and is not intended as legal advice. If you have questions regarding your specific situation, please contact an estate planning and elder law attorney licensed in your state of residence.