Division of Assets
In 1988 Congress passed a law commonly referred to as the “Spousal Impoverishment Act”, which, despite its name, was designed to prevent a married couple from having to expend all of their financial assets before one of the spouses would qualify for nursing home Medicaid. As a result, the spouse that remains in the home (the “Community Spouse”) can keep a portion of the couple’s resources, and the spouse that does require Medicaid (the “Institutionalized Spouse”) can obtain benefits.
As part of the law, Congress established limitations on the number of assets that the Community Spouse is allowed to retain if the Institutionalized Spouse is going to be eligible for benefits. The limits are commonly referred to as the Community Spouse Resource Allowance (CSRA). For 2020 Missouri allows the Community Spouse to retain at least $25,728 up to a maximum of $128,640.00. This amount is adjusted annually for inflation and cost of living. A Division of Assets application is the process used under Missouri Medicaid to determine the actual amount within that range that the Community Spouse will be allowed to keep.
The Division of Assets is calculated on the first day the Medicaid applicant is admitted to a hospital and/or nursing home for at least 30 continuous days. The married couple’s countable assets (which excludes a very limited amount of assets considered to be exempt) are divided into two with each spouse being assigned their respective one-half interest. It does not matter which of the individuals own the asset, the couple’s assets are combined when determining the Division of Assets. This means the healthy spouse that has significantly more assets will have their assets reduced through this process. Therein is one of the reasons working through this process with an Elder Law lawyer is critical to make sure everyone’s interests are protected to the maximum extent of the law. A recent article in the Wall Street Journal indicated that 86% of widows live below the poverty line as a result of paying for the care costs of their spouse.
By way of example, let’s assume that John and Mary are a married couple with $300,000 in financial assets, John has dementia and requires nursing home care. The Medicaid caseworker will allocate the $300,000 in financial assets and attribute $128,640 to Mary as her CSRA and $171,360 to John. The bad news is that in order to be eligible for Medicaid, John must have less than $5,000 in his name. So, the family will be told to spenddown $166,360 of the assets attributed to John. In summary, John and Mary are going to be told they must spend 55% of their life’s savings before John will be eligible for Medicaid. With a reduction in the Community Spouse’s assets of that magnitude, it is not hard to see how 86% of surviving spouses end up living below the poverty line as a result of their spouse’s medical expenses.
With proper and timely planning with the assistance of a qualified Medicaid Asset Protection attorney such as G. Brent Powers, John and Mary would not need to spenddown any of their life savings. The key is to employ the correct legal strategies and documents ahead of time to avoid an unfortunate and costly spenddown situation.
But what if proper planning was not done ahead of time? Is all hope lost? Fortunately, the answer to that question is “no”. Through the use of what is referred to as a “Marital Medicaid Compliant Annuity”, Mary would still be able to retain virtually all the financial assets even if John is already in a nursing home. G Brent Powers has the required experience and expertise to ensure the proper use and purchase of this type of annuity to prevent Mary’s impoverishment.
Brent always takes the time to meet with clients in person before applying or appearing in court. Call (816) 233-0257 today for your free, initial consultation.
