What Happens When My Spouse Enters a Nursing Home?

Introduction

When a spouse enters a nursing home paid for by Medicaid and the other spouse is healthy and can live independently, couples have many questions. Some questions are financial in nature, such as what happens to each of the spouse’s income. While other questions relate to their home and other assets. In this article, we address these pressing questions and concerns in order to put families at ease.

In brief, the federal government has written a law to ensure the healthy spouse does not go broke and is not left without a place to live when their spouse enters a nursing home. In Medicaid-speak, this law is referred to as Spousal Impoverishment Protection, Spousal Impoverishment Law, or Division of Assets. This law ensures the spouse that is not in a nursing home has enough funds to live by protecting a set amount of income and assets.

It should also be emphasized that this article is about nursing homes paid for by Medicaid. The national average cost of nursing home care in 2024 is $325 per day, but varies greatly depending on one’s state of residence. Medicaid pays for nursing home care for most Americans who require it. However, one must be financially eligible for Medicaid. Medicare does not pay for long term nursing home care.

Finally, to avoid confusion, readers should be aware there are several different terms used to describe the non-institutional spouse. They include “Community Spouse,” “Healthy Spouse,” and “Well Spouse.” There are also terms used for the spouse residing in the nursing home, and these are “Institutionalized Spouse” and “Needy Spouse.”

Will I lose my income?

No, you, as the healthy spouse, will not lose your income, including Social Security. In fact, your income, as the Non-Institutionalized Spouse, is not even considered when your spouse applies for Medicaid. And it has no impact on whether your spouse is eligible for this program. It is only your spouse’s income that will be considered for eligibility purposes.

Although your income is not a factor in your spouse’s eligibility, a few states require the community spouse to contribute a portion of their income towards the cost of the nursing home care, IF their income exceeds a certain amount. However, even if this is the case, you, as the healthy spouse, will not have to contribute to the point that you will not have enough income on which to live.

Do I lose the income of my spouse who’s in a nursing home?

One doesn’t necessarily lose the income of their institutionalized husband or wife simply because that spouse moves into a nursing home paid for by Medicaid. Whether you, as the healthy spouse, can receive your spouse’s income depends on your own income, and if you need the extra income to support yourself.

How much of your institutionalized spouse’s income you receive is based on something called the Minimum Monthly Maintenance Needs Allowance (or MMMNA). The MMMNA is the minimum amount of income to which a healthy spouse is entitled monthly. In simplified terms, if your income is determined to be below the MMMNA, then your income can be supplemented with your spouse’s income to meet the MMMNA. For 2024, the federal government has set the MMMNA at $2,465. Two exceptions are Alaska ($3,080) and Hawaii ($2,835), which have higher MMMNAs due to the increased cost of living. (These figures increase in July of each year.)

The federal government also sets a maximum monthly maintenance needs allowance, which, for 2024, is $3,854. (Unlike the MMMNA, the maximum monthly figure changes each January.) The maximum monthly maintenance needs allowance calculation is based on a rather complicated formula that takes your housing costs into consideration. 

While the federal government sets this minimum and maximum monthly income allowance, some states use just one standard figure within the given parameters. For instance, as of 2024, North Dakota uses a standard spousal income allowance of $2,550.

Will my spouse in the nursing home lose their income?

The short answer is yes, they will lose most of their income. When your spouse enters a nursing home that is paid for by Medicaid, he or she is only able to keep a small part of their monthly income. This is called a Personal Needs Allowance (PNA). It can be used on anything your spouse wishes, such as salon services, magazines, hygiene products, and clothing.

The amount of the monthly personal needs allowance varies by state. For example, in 2024, the PNA in Colorado is $105.56 / mo. and in Massachusetts it is $72.80 / mo.

There is one exception to this rule. If you, as the healthy spouse, have income that falls below the Minimum Maintenance Needs Allowance (see question above) for your state, or are determined to be entitled to a higher spousal allowance based on shelter costs, a portion of your institutionalized spouse’s income can be transferred to you.

Will I lose my home?

No. If you, the community spouse, continue to live in your home, you will not lose it, regardless of the value. In addition to your house being exempt (a non-countable asset for Medicaid eligibility), other assets are also considered exempt. Therefore you are permitted to hold onto them. These include:

• Household items
• Personal effects
• A vehicle
• Pre-paid funerals
• Burial plots
• Life insurance policies that have a face value no greater than $1,500. (Some states have a higher exemption amount.)

Will I lose my 401K, IRA, stocks or savings?

The short answer is maybe. It depends on your state and the combined value of these assets. However, by working with a Medicaid planner, it is likely the non-institutionalized spouse will be able to keep most of these assets.

Unlike income, where a Medicaid recipient’s income is considered separate from his or her spouse, a married couple’s assets are considered jointly owned and are used to determine Medicaid eligibility. This holds true even if the assets, such as a savings account, are only in one spouse’s name. Of course, certain assets, such as your home, household goods, vehicle, and personal belongings, are exempt. (Learn more about Medicaid and joint assets here).

Countable (non-exempt) assets include:

• Checking and savings accounts
• CDs
• Stocks and bonds
• Property that is not your primary residence

Independent Retirement Accounts (IRAs) and 401Ks are a little bit trickier. For example, there are approximately 20 states that allow a community spouse’s 401K or IRA to be exempt, given the asset is fully owned by him or her.

The Spousal Impoverishment Law has been put into effect to protect you, the healthy spouse, from becoming “impoverished” by allowing you to keep a certain portion of your and your spouse’s combined, non-exempt assets. Briefly, what happens is that all countable assets are added up and the state Medicaid agency decides how much you can keep of the combined assets. This is called the Community Spouse Resource Allowance (CSRA). A minimum and maximum CSRA is set by the federal government, which, as of January 2024, ranges from $30,828 to $154,140. The CSRA varies by state, with each state choosing the amount within the federally provided range. For instance, Illinois sets the CSRA at $129,084.

In the states that only use one figure, the non-applicant spouse can keep 100% of the couple’s joint assets, up to the figure set by the state. In other states, both a minimum and maximum CSRA are used. How the CSRA works in this case is that the community spouse can keep either 100% of the couple’s joint assets, up to the minimum figure, or half of the couple’s joint assets, up to the maximum figure (whichever is greater).

Is my spouse in a nursing home able to keep any assets?

Yes, your spouse can keep a minimal amount of assets. This figure varies by state, but in most states, the spouse entering the nursing home can keep $2,000 in assets.

What can be done to protect my assets?

You cannot simply give your assets away to qualify a spouse for Medicaid. This can put you in violation of Medicaid’s 5-year Look Back Period and result in a period of Medicaid ineligibility. However, there are ways for you to protect your assets.

You can put money into non-exempt assets, such as paying for home modifications / renovations, vehicle modifications, or purchasing an irrevocable funeral trust. You can also pay off debt, such as your mortgage loan or credit cards. In addition, you could purchase an annuity. This takes countable assets and transforms them into non-countable income.

Some of these approaches are straightforward and others are complicated. It is best to consult with a Medicaid eligibility expert before taking any action to ensure you are not in violation of Medicaid’s complicated rules.

How can a professional Medicaid planner help?

Professional Medicaid planners provide a wide variety of assistance, from helping with the Medicaid application paperwork to restructuring finances to ensure eligibility. The rules of Medicaid eligibility are complex, state-specific and ever-changing. And the eligibility requirements differ for a single individual versus a married couple. The application process can be exceptionally complex when only one spouse of a married couple is applying for long-term Medicaid. Applications can be further complicated when one spouse is receiving veterans’ benefits.

Professional Medicaid planners are extremely knowledgeable in the complexities of Medicaid, as well as have experience in situations, such as yours, where one spouse will be entering a Medicaid-funded nursing home. Working with a professional is particularly beneficial if you and your spouse are over the income and / or asset limit(s). Because being over the limits doesn’t necessarily equate to denial of Medicaid services. To learn more about professional Medicaid planners, click here.