Long-term care costs can quickly drain a couple’s savings, leaving the healthy spouse in a difficult financial position. Many families assume they must spend everything before Medicaid steps in, but that’s not the case. With the right planning, you can protect assets while ensuring that your spouse receives the care they need.
Medicaid, or MassHealth in Massachusetts, has rules in place to prevent financial hardship for the spouse who remains at home, but without proper planning, you could lose more than necessary. By taking proactive steps, you can preserve financial security and avoid unnecessary stress during an already challenging time.
Understanding Medicaid Spousal Impoverishment Protections
When one spouse needs long-term care, Medicaid’s spousal impoverishment protections help ensure the healthy spouse isn’t left without financial resources. Without these protections, couples might have to spend down nearly all their assets before Medicaid coverage begins, leaving the community spouse—the one remaining at home—with little to live on.
Medicaid allows the community spouse to keep a portion of the couple’s assets and income to maintain financial stability. Two key protections are:
- Community Spouse Resource Allowance (CSRA): This allows the healthy spouse to retain a certain amount of the couple’s countable assets while the other spouse qualifies for Medicaid.
- Minimum Monthly Maintenance Needs Allowance (MMMNA): If the community spouse’s income falls below a set amount, they may receive a portion of the institutionalized spouse’s income.
These rules help ensure that long-term care expenses don’t leave the community spouse struggling financially.
Asset Preservation Strategies
Medicaid has strict limits on the assets a couple can keep while qualifying for assistance, but certain strategies help protect wealth without jeopardizing eligibility.
A few ways to protect assets include:
- Spousal transfers – Medicaid allows assets to be transferred between spouses without penalty, helping preserve resources for the community spouse.
- Exempt assets – Some assets, such as a primary residence, a vehicle, and household goods, do not count toward Medicaid’s asset limit.
- Medicaid-compliant annuities – Converting excess assets into an annuity that provides income to the community spouse can help maintain financial stability.
- Irrevocable trusts – Properly structured trusts can shield assets from Medicaid’s spend-down requirements while ensuring they pass to heirs.
These strategies help protect assets while securing the care your spouse needs.
Income Allocation and Eligibility Maintenance
When one spouse qualifies for Medicaid, the community spouse may be entitled to a portion of the institutionalized spouse’s income. Medicaid’s MMMNA ensures the healthy spouse has enough income to cover basic expenses. If their income falls below the allowed threshold, they can receive a portion of the institutionalized spouse’s income to make up the difference.
Proper income structuring helps maintain Medicaid eligibility while preventing unnecessary financial strain. By planning ahead, couples can retain as much income as possible and ensure long-term financial security for both spouses.
Community Spouse Resource Allowance & Spend-Down Techniques
Medicaid’s CSRA permits the healthy spouse to retain a portion of the couple’s countable assets while the other qualifies for Medicaid. This amount includes savings, investments, and other non-exempt assets.
If assets exceed the allowable amount, a spend-down strategy can help. Acceptable spend-down techniques include:
- Paying off debts – Reducing medical bills, mortgage balances, or credit card debt.
- Home improvements – Making necessary repairs, as a primary residence is often exempt.
- Purchasing exempt assets – Buying a new vehicle, prepaying funeral expenses, or investing in household goods.
These techniques allow couples to legally reduce countable assets while preserving financial stability for the community spouse.
Protecting Financial Resources During Long-Term Care
Long-term care is costly, but planning ahead can help protect your financial resources. Medicaid allows certain strategies to preserve assets while ensuring eligibility. Tools like Medicaid-compliant annuities, irrevocable trusts, and exempt asset transfers can shield savings from unnecessary depletion.
It’s also important to consider Medicaid’s look-back period, which penalizes certain asset transfers made within five years of applying for benefits. Early planning can help you avoid penalties and ensure both spouses remain financially secure.
Plan for Long-Term Care in Southeastern Massachusetts
Medicaid planning helps protect your savings while ensuring your spouse remains financially stable. Without a plan, long-term care costs can quickly drain your assets. Contact us today to discuss your options and secure your financial future.