Warning! Medicaid Rules Apply For Same Sex Marriages!

Now that same sex marriages are legally recognized in Pennsylvania and by the federal government, same sex married couples have to be aware of all the legal ramifications of being married.  We are now working with a number of same sex couples to formulate estate plans and Medicaid asset protection plans.  One of the main concerns voiced by our clients is how to combat the rising cost of long term nursing care.  Before a same sex couple marries, only the assets of the long term care recipient are available for spending on his or own long term nursing care.  One of the new found worries of legalized same sex marriage will be the general availability of both spouses’ assets for long term care spending for either or both spouses.  After marriage, your assets are not JUST yours anymore, they are a part of the marital collective.  If one spouse enters a care facility, he or she will only qualify for Medicaid to pay for care once marital assets have been significantly spent down.  Here are some of the basic rules for qualifying one spouse for Medicaid while the Community Spouse remains at home:

The spouse of a nursing home resident called the “community spouse” is limited to one half of the couple’s joint assets up to $119,220 (in 2016) in “countable” assets. This figure changes each year to reflect inflation. Called the “community spouse resource allowance,” this is the most that a state may allow a community spouse to retain without a hearing or a court order. The least that a state may allow a community spouse to retain is $23,844 (in 2016).

Example: If a couple has $600,000 in countable assets on the date the applicant enters a nursing home, he or she will be eligible for Medicaid once the couple’s assets have been reduced to a combined figure of $121,220 — $2,000 for the applicant and $119,220 for the community spouse.

Example 2: If a couple has $100,000 in countable assets on the date the applicant enters a nursing home, he or she will be eligible for Medicaid once the couple’s assets have been reduced to a combined figure of $52,000 — $2,000 for the applicant and $50,000 for the community spouse.

All assets are counted against these limits unless the assets fall within the short list of “noncountable” assets. These include the following:

  • Personal possessions, such as clothing, furniture, and jewelry
  • One motor vehicle, regardless of value, as long as it is used for transportation of the applicant or a household member. The value of an additional automobile may be excluded if needed for health or self-support reasons (check your state’s rules).
  • The applicant’s principal residence, provided it is in the same state in which the individual is applying for coverage. In some states, the home will not be considered a countable asset for Medicaid eligibility purposes as long as the nursing home resident intends to return home; in other states, the nursing home resident must prove a likelihood of returning home. Under the Deficit Reduction Act of 2005 (DRA), principal residences may be deemed non-countable only to the extent their equity is less than $552,000, with the states having the option of raising this limit to $828,000 (in 2016). In all states and under the DRA, the house may be kept with no equity limit if the Medicaid applicant’s spouse or another dependent relative lives there
  • Prepaid funeral plans and a small amount of life insurance
  • The Community Spouse’s Retirement Assets (IRA, 401k etc.)
  • Assets that are considered “inaccessible” for one reason or another.

In particular, if there is a wealthier 1/2 of a same sex couple, he or she has to realize that he or she is making their assets available for the long term care needs of their spouse to be.  This is not to say that a couple should not get married because of this issue, it is to say that they should be aware that this is one among many legal considerations.  Remember, there is planning that can be done to help protect assets both before and after marriage.  The sooner planning is commenced, the better the protection in most cases.

If you want to discuss the estate and elder law planning issues associated with marriage or if you want assistance developing a comprehensive asset protection plan in Pennsylvania, please contact Douglas L. Kaune, Esquire at (610) 933-8069 or email him at dkaune@utbf.com. Doug’s entire practice is focused on elder law, Medicaid application, estate planning, trust planning, estate administration and protection of clients’ assets from nursing home spending and estate and inheritance taxation. Unruh, Turner, Burke & Frees, P.C. is a full service law firm which has three convenient office locations in Phoenixville, West Chester and Paoli, Pennsylvania. The firm primarily services clients in Chester, Montgomery, Delaware, Philadelphia, Bucks and Berks Counties, but can represent clients throughout Pennsylvania.