Whenever a married individual applies for MassHealth (Medicaid), the Office of Medicaid will take a snapshot of the couple’s “countable” assets on the date the individual entered long term care. Of those assets, the non-applicant spouse (called the “Community Spouse”) is entitled to keep a portion. That portion is known as the community spouse resource allowance (“CSRA”). In January of 2011 the CSRA in Massachusetts was set to one half of the couple’s countable assets, but not to exceed $109,560. What follows is a brief review of what you can expect to hear from your Medicaid planning counsel on community spouse protection strategies while maintaining Medicaid eligibility for long term care.
Maximizing the Couple’s Snapshot of Countable Assets and Income
Because the CSRA depends entirely upon the snapshot date (when the MassHealth applicant entered an institution), there is an incentive to have countable assets at least twice the amount of the maximum CSRA. Many do not have access to such resources, but there are a host of methods available to do so. Some choose to defer the payment of large debts until after the date of institutionalization, thereby increasing the CSRA. Others might borrow on their home prior to the date of institutionalization, boosting the amount of cash on hand at the snapshot point.
Similar considerations must be made for the couple’s income. Much like the asset allowance, the community spouse is entitled to an income allowance. To start with, the community spouse is entitled to all income that he or she alone receives, regardless of amount or source. And if this own monthly income falls below a certain level, the community spouse may also be entitled to some of the MassHealth applicant’s income. This level, typically ranging somewhere from $1800-$1900, is known as the minimum monthly maintenance needs allowance, or “MMMNA.” In cases where the couple’s combined income is still insufficient the asset allowance may be increased after a fair hearing. A fair hearing may also be requested to increase the MMNA itself, if significant financial duress exists and income is still available from the institutionalized spouse.
Purchasing an Annuity to Protect Assets
An annuity is essentially the upfront payment of a lump sum premium in exchange for periodic payments for life or a term of years. An “immediate” annuity will begin payment within a year of purchase, whereas a “deferred” annuity will collect interest for a period of years before payments begin. To hedge against the possibility that the purchaser will die prematurely thereby terminating the annuity payments, many will opt for a “term certain” provision that guarantees payment to the annuitant or his or her beneficiary for the term certain.
The annuity strategy still must satisfy certain conditions to qualify as a valid spend down of resources under Medicaid and MassHealth. So long as the total expected payments of an annuity equal or exceed the initial purchase price AND fall within the purchaser’s life expectancy, the Office of Medicaid will generally accept the resource transfer and allow eligibility for Medicaid for long term care.
Other Strategies and Considerations
While we have briefly reviewed some of the more common MassHealth planning strategies for protecting the community spouse, there are many other factors to consider in each couple’s unique situation. Whether or not to transfer joint assets to the community spouse, execute a new will or trust, or make special considerations when a spouse is terminally ill are just a few examples. Gaining eligibility for Medicaid for long term care is a lot less burdensome when all actions are taken with care. Ultimately, when you are serious about Medicaid and MassHealth planning you will need to speak with an experienced MassHealth attorney to develop a tailored plan.
Back to Spend Down Eligibility for Medicaid Part 1
