The financial pitfalls facing a married couple when one spouse requires nursing home care are wide, deep, and surprisingly hidden. The emotional pain of a married person’s admission of his or her spouse to a nursing home rivals the painful experience of a spouse’s death. Unfortunately, critical financial decisions rush toward the healthier spouse like a flood in that emotionally vulnerable moment. When it seems that things could not get worse, a few seemingly sensible and logical actions can turn a heartbreaking health crisis into an irreversible financial nightmare. These are some of many actions often result in financial tragedies for married nursing home residents and their spouses:
- Normal Fact Pattern: A demented spouse can usually keep countable resources worth up to $2,000 and the healthier spouse can keep up to 50% of countable resources that the couple owns on the date when the demented spouse requires long-term, inpatient care (called the “Snapshot Date”). Bad Move: A healthier spouse might follow advice from non-lawyers to buy a new car and prepay funeral expenses by transferring large life insurance policies to a funeral home. Sad Result: The car purchase and funeral expense prepayment shrink the countable resources before the Snapshot Date. The premature resource reduces the countable resource value too soon, so the spouse at home can only keep up to 50% of the reduced countable resource value. Better Action: The healthier spouse should delay all expenditures and transfers of life insurance policies and other assets until after consulting with an experienced elder law attorney and after it is clear that the disabled spouse will not return home.
- Normal Fact Pattern: The healthier spouse could keep the house, all of the couple’s other real estate, a car, and the healthier spouse’s IRA. Terrible Move: The healthier spouse might cash out his or her IRA and sell the house, other real estate, or the car. Tragic Result: The liquidation of previously Medicaid-exempt assets become countable resources that disqualify the nursing home resident for Medicaid! Better Action: Consult with an experienced elder law attorney about which kinds of asset sales and account liquidations fit an ideal plan to conserve and protect the healthier spouse’s assets.
- Normal Fact Pattern: The couple put their children’s names on the couple’s real estate title about 4 years and 11 months ago and the disabled spouse is in the nursing home now. The title transfer will disqualify the disabled spouse for Medicaid benefits now, but the transfer will have no effect if the couple waits until the transfer is more than 5 years old. Reckless Move: Apply for Medicaid for the disabled spouse immediately upon admission to a nursing home. Nightmare Result: The premature Medicaid application may fall within Medicaid’s 5-year “lookback period,” so Medicaid disqualifies the disabled spouse for several months or years of eligibility. The Healthier spouse must pay the disabled spouse’s nursing home bills during the disqualification months instead of only paying one nursing home for the last month of the 5-year lookback period. Better Action: Hire an experienced elder law attorney to coordinate a Medicaid application with nursing home officials and financial advisors to make sure that no one files a Medicaid application too soon.