Dual Cash Flow Issues: What To Do When One Spouse Goes To A Nursing Home

Long Term Care Planning

When most people think ahead to their retirement years, they tend to think of things they’ll do together: traveling, pursuing hobbies, volunteering. Even spouses with separate interests generally imagine that they will be living in the same household. Unfortunately, as the years pass, one spouse may need care that the other cannot provide at home, even with help. What happens when one spouse goes to a nursing home?

The situation is common enough that terms have emerged for spouses who find themselves dealing with it. The spouse in the nursing home is commonly referred to as the “institutionalized spouse” or “needy spouse.” The spouse who remains at home is called the “community spouse” or “well spouse.” In addition to the emotional and practical issues involved in living separately, the community spouse often worries about how to pay for nursing home care for a spouse along with their own ongoing living expenses.

Managing Cash Flow When One Spouse is in a Nursing Home

You don’t have to be a math whiz to understand that when income is fixed and expenses increase, sooner or later, there is going to be a financial shortfall. Fortunately, there are measures that an elder law attorney can help clients take to prevent that outcome when one spouse needs long-term care. The community spouse should not, and does not, need to impoverish themselves in order for the other spouse to receive needed care in a nursing home. Let’s discuss the laws that help couples when one spouse is in a nursing home.

Nursing home care, as most people know, is very expensive. The average cost of a private room in a Michigan nursing home is $9,733 per month as of this writing. Most couples can’t manage that added cost for long without help. Medicare does not pay for nursing home care except for brief periods following a hospital stay. The good news is that Medicaid does, for care recipients who meet Medicaid’s income and asset limits. For some people, that may require “spend down” of income or assets.

The spend-down requirement exists to ensure that people are not using government benefits to pay for care when they have the means to pay for it themselves. At the same time, forcing the community spouse to deplete their own resources to pay for the institutionalized spouse’s care makes no sense. The federal government has put “spousal impoverishment protection” laws into place to protect assets for the community spouse while the institutionalized spouse qualifies for benefits.

Common Questions About Paying for a Spouse’s Nursing Home Care

Because it is so common for one spouse to need to go into a nursing home while the other mate remains at home, we get a lot of questions about the dual cash flow issue. Here are answers to some of the most frequently asked questions.

My husband is in a nursing home. Does my income count toward his Medicaid eligibility?

No. Your income is not considered part of your spouse’s income when they apply for Medicaid; only their income is. Your income, including Social Security, remains available for your own needs.

However, in a small minority of states, the community spouse may be required to contribute toward the cost of the institutionalized spouse’s nursing home care. Even in those states, however, contribution is only required if the community spouse’s income exceeds a particular level. So you should never be required to pay so much toward your spouse’s care that you cannot afford to pay your own living expenses.

What if I depend on the income of my spouse in the nursing home? Will all that income now go toward their care?

For many older couples, one spouse has more income, and the couple relies on that income to pay their expenses. When the spouse with more income needs to go into a nursing home, it is natural for the community spouse to worry about meeting expenses.

If you are a community spouse who depends on your institutionalized spouse’s income to survive, you may be eligible to keep some or all of their income. The amount of your spouse’s income you can get depends on a number of factors, including whether you have income of your own and how much of your spouse’s income you need for support. There is a calculation that is done that includes certain minimum and maximum figures and limits, which are set by federal and state governments.

Is there any way to protect even more assets and income from the nursing home?

In general, the earlier that a couple plans for the possibility that one of them may need to go into a nursing home the more income and assets they can protect for the other spouse’s needs. However, there is a right way to go about this and a wrong way.

Transferring assets to others for less than their fair market value during the Medicaid “look back” period could result in denial or delay of eligibility for Medicaid benefits. However, there are permissible ways to reduce assets that are counted toward Medicaid eligibility, such as paying off accrued debt or pre-paying funeral expenses.

Your elder law attorney can advise you on how to legally reduce your countable assets. Your attorney may also be able to help you establish a “sole benefit” trust. This is an irrevocable trust for the sole benefit of the community spouse. Because the assets in the trust are not available to the institutionalized spouse, they are not counted toward Medicaid eligibility so long as the trust is properly drafted and structured.

If you have questions about Medicaid planning and how to pay for nursing home care, please contact our law office to schedule a consultation.

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