Division of Assets is the name commonly used for the Spousal Impoverishment provisions of the Medicare Catastrophic Coverage Act of 1988. It applies only to married couples. The intent of the law was to change the eligibility requirements for Medicaid in situations where one spouse needs nursing home care while the other spouse remains in the community, (i.e. at home or in an assisted living facility). The law, in effect, recognizes that it makes little sense to impoverish both spouses when only one needs to qualify for Medicaid assistance for nursing home care.
As a result of this recognition, Division of Assets was born. Basically, in a division of assets, the couple provides Medicaid with verification of the value of all their non-exempt (countable) assets at the time the nursing home spouse first entered a hospital or nursing home for more than 30 days (this is known as the date of institutionalization). See the highlighted section below for a list of exempt assets.
Medicaid then takes the total value of the non-exempt assets at the date of institutionalization and divides that total in half. The resulting amount is known as the Community Spouse Resource Allowance or CSRA. Once the couple has reduced the total for the non-exempt assets to the CSRA that was determined then the nursing home spouse is eligible to begin receiving Medicaid benefits.
It should be noted that Medicaid has a minimum and maximum amount for the CSRA. These amounts increase annually. Currently the minimum is $23,844. This means that if the couple’s total non-exempt assets on the date of institutionalization are at or below $23,844 then the nursing home spouse is immediately eligible for Medicaid benefits. If the couple’s total non-exempt assets on the date of institutionalization are less than double the minimum CSRA (for example $40,000) then they automatically get to keep the minimum CSRA.
The current maximum CSRA is $119,220. This means that if a couple has more than double the maximum CSRA (for example $300,000) they must reduce the total non-exempt assets to the maximum CSRA in order for the nursing home spouse to be eligible for Medicaid benefits.
Each state also establishes a monthly income floor for the at-home spouse. This is called the Minimum Monthly Maintenance Needs Allowance or MMMNA. This permits the community spouse to keep a minimum monthly income ranging from about $1967 to $2981. Again, these figures increase annually.
If the community spouse does not have at least $1967 in income then her or she is allowed to take income from the nursing home spouse in order to bring his or her income up to the MMMNA. This helps avoid the necessity for the at-home spouse to dip into savings each month, which would result in gradual impoverishment. After providing the necessary income to the at home spouse the nursing home spouse is also permitted to keep enough income to pay his or her health insurance premiums. They are also entitled to a small personal needs allowance of between $45 and $62 depending on the state. The remainder of their income is paid to the nursing home while Medicaid covers the balance of the monthly nursing home costs, as well as prescription and other medical costs.
Exempt Assets
- The Home no matter its value. The home must be the principal place of residence. The nursing home resident may be required to show some “intent to return home” even if this expectation is unrealistic.
- Household and Personal Belongings furniture, appliances, jewelry and clothing.
- One Vehicle and there may be some limitations on value.
- Burial Plot and Irrevocable Funeral Plans for you and your spouse. There maybe some limitations the plans themselves.
- Cash Value Life Insurance policies as long as the cash surrender value of all policies combined does not exceed $1,500. If they do exceed $1,500 in total cash surrender value, then the cash value in these policies is countable. NOTE: Depending on the state the cash value of life insurance could be considered as a non-exempt asset if the couple has funeral plans.
- Kansas the nursing home spouse cannot have more than $2,000 and in Missouri no more than $999.99.
The bottom line is married couples should seek advice from someone who knows Medicaid laws before they start spending their lifetime’s worth of savings that they may not need to spend.
