Austin Texas Estate Planning Blog

Does ‘Spousal Impoverishment’ Protect against Medicaid Recovery

Does ‘Spousal Impoverishment’ Protect against Medicaid Recovery?

April 10, 2023 • | Law Office of Zachary D Kamykowski, PLLC
Seventy percent of those who reach age 65 will need long-term care services or expensive in-home nursing care, and 42% of it nationwide is paid for by Medicaid.


Long-term care costs are a significant financial burden for many families, with an annual price tag of nearly $100,000. As a result, lifelong earned assets can quickly vanish. Fortunately, the Spousal Impoverishment program can help protect the assets of married couples when one spouse requires nursing home care. This blog post will explore the Spousal Impoverishment program, including how it works, how to apply, and the importance of seeking legal advice.


The Spousal Impoverishment Program: A Brief Overview

KMAland's recent article, "'Spousal Impoverishment' Preserves Assets from Medicaid Recovery," highlights that states must recover funds Medicaid spends on in-home or out-of-home nursing care for individuals aged 55 and older. However, the Spousal Impoverishment program allows the healthy spouse, the "community spouse," to save some assets, such as their house, if they continue to live there.


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Applying for Spousal Impoverishment Assessment

When one spouse requires nursing home care, they should request a Spousal Impoverishment assessment through the Department of Health and Human Services. This process involves dividing the couple's total assets in half. The half that goes to the spouse requiring nursing care is considered when determining their eligibility for Medicaid. For example, in Texas, a person must spend their assets down to $2,000 to qualify for Medicaid.


Protecting the Family Home

The family home is not included in calculating the couple's assets. However, once the spouse needing care qualifies for Medicaid, the house should be transferred to the community spouse's name. If this is not done and the community spouse dies first, the house becomes eligible for Medicaid recovery, as it is considered an asset of the spouse receiving Medicaid.


Limits and Income for the Community Spouse

The community spouse can keep a maximum of approximately $137,000 and a minimum of around $27,000 in assets. They can also maintain their income up to just over $3,400 a month, with amounts adjusted annually based on inflation. The community spouse may qualify to keep a lower amount if the couple waits until their assets have diminished before seeking a Medicaid assessment.


The "Look-Back" Period

Assets given away within five years of applying for Medicaid, the "look-back" period in most states, will be considered when determining total assets. This won't permanently disqualify a person from Medicaid but will result in a "penalty period."


Seeking Expert Advice about Spousal Impoverishment

The Spousal Impoverishment Program and Medicaid Recovery include several exceptions and special considerations. Seniors must consult with an experienced Austin estate planning attorney and not delay seeking a Spousal Impoverishment assessment if they anticipate needing Medicaid.


The Spousal Impoverishment program can be a lifeline for couples facing the high costs of long-term care. Understanding how the program works and seeking professional legal advice can help protect assets and provide peace of mind for families navigating this challenging situation.

Reference: KMAland (March 19, 2023) "'Spousal Impoverishment' Preserves Assets from Medicaid Recovery"

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