When one spouse enters a nursing home (Referred to as the “Institutionalized Spouse”), the spouse remaining at home (Referred to as the “Community Spouse”) often faces economic uncertainty.
One of the responsibilities of elder law attorneys in Pennsylvania (PA) is to assist the Community Spouse to maximize the amount of income they can retain once their spouse enters a nursing home. We recognize that life will continue for the Community Spouse well after their spouse has entered the nursing home. He or she will continue to have significant expenses going forward including, but not limited to maintenance of their home, real estate taxes, car and home owners’ insurance, rent or mortgage, health care, food and clothing.
Take Care Of You And Your Spouse
The client must submit documentation to the Pennsylvania Department of Public Welfare (Referred to as “DPW”) requesting that they perform an asset assessment at the time the Institutionalized Spouse enters a nursing home.
To learn more about Pennsylvania Department of Public Welfare and their programs click here.
Generally, the resource assessment is the process for determining how much of the marital asset base can be retained by the Community Spouse even after his or her spouse enters a nursing home. Conversely, the process also determines the portion of the marital assets that must be spent down before the Institutionalized Spouse becomes eligible for Medicaid. The resource assessment process has and will be reviewed in more detail in other articles on this site.
Suffice it to say, the resource assessment is very important as it relates to the Community Spouse’s ability to retain a portion of the marital assets. The resource assessment is also a stepping stone to a determination of the portion of the marital income the Community Spouse will be permitted to retain. Although I will not detail the resource assessment here, I do want readers to know that there a number of pitfalls relating to the timing of the submission and the valuation of assets for the resource assessment.
Once the resource assessment is complete and the Department of Public Welfare in Pennsylvania has made an asset retention finding, the Community Spouse will have an opportunity to submit a DPW worksheet for determination on the portion of the marital income that he or she may retain during the time the Institutionalized spouse is receiving Medical Assistance/Medicaid.
This is often a critical juncture for the Community Spouse. We want to obtain the Community Spouse’s Maximum Monthly Maintenance Allowance (MMA) within the guidelines set by the Department of Public Welfare (DPW). The Department of Public Welfare releases figures annually that represent the minimum and the maximum amount of marital income a Community Spouse may retain.
To achieve the Maximum Monthly Maintenance Allowance, the applicant must document all expenses and all sources of income. It is important that all eligible expenses are included and that you portray the income sources in a way that is most favorable to the Community Spouse’s efforts to maintain economic security. Once the worksheet is completed, you will have a very good idea of the amount of monthly income the Community Spouse is permitted to receive.
If the total income earned by husband and wife is below the Maximum Monthly Maintenance Allowance then the Community Spouse will have a relatively brief opportunity to take steps to increase his or her own Monthly Maintenance Allowance.
This opportunity could be lost quickly so decisive steps must be taken. One of the best options will be the purchase of an actuarially sound Immediate Annuity. This planning option allows the Community Spouse to transform assets that would otherwise have to be “spent down,” before the Institutionalized Spouse becomes eligible for Medicaid into an income stream. This allows the Community Spouse to both increase the income stream while his or her spouse is in the nursing home and also to maintain that increased income stream should the institutionalized spouse pre-decease him or her.
The relatively short period of time following the first spouse’s entry to a nursing home is very important for the financial well being of the Community Spouse. The Community Spouse should seek professional assistance to insure they are protected to the greatest extent possible.
To read how you can avoid or prolong your need for a Nursing Home for you and or your spouse click on our article Veteran’s Benefits Can Help With Assisted Living Costs.
Also, read this review of the benefits of Long Term Care Insurance.
Douglas L. Kaune is a partner in the Estate & Trust and Elder Law sections of Unruh, Turner, Burke & Frees, P.C. Please call Doug at 610 933 8069 to discuss your planning needs and to schedule a no obligation initial consultation.
Douglas L. Kaune
