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Preserving Assets and Maximum Income for the Community Spouse in 2023 When the Institutionalized Spouse Enters a Nursing Home

January 1, 2023 – 9:29 pm

When one spouse enters a nursing home and may be applying for MassHealth, the spouse who remains at home or in assisted living often has some important choices to make with an unbiased legal advisor.

One of the biggest mistakes that many spouses make when the other spouse enters a nursing home is not getting legal advice from an elder law attorney about Medicaid, known in Massachusetts as “MassHealth.” The “free” information that many community spouses (which under MassHealth law  means any spouse who is not in a nursing home) often rely on can turn out to be quite costly to them.

There are different layers in MassHealth law, and many persons only seem to know about the bottom layer, so let’s go over that one first. Under 2023 law, just about everything other than the home and car are totaled, and the community spouse supposedly can keep only the first $148,260.00.

Unfortunately, this lower layer is where the knowledge of many persons ends, and two other upper layers of the law effectively override the lower layer. One upper layer is that the community spouse can enter into certain types of annuity or promissory note agreements with the spenddown (that is, excess) assets.

Note, however, that: (A) the community spouse’s life expectancy in tables utilized by the MassHealth agency usually must be complied with; (B) not every annuity or promissory note will work, because the agency often adds its own spin on what is a valid transfer; (C) the published regulations and unpublished internal procedures and policies which now allow such a move can change with little advance notice, so it is often not advisable that an annuity or promissory note be purchased until the institutionalized spouse’s nursing home stay has already occurred; and most importantly (D) some community spouses can keep everything without needing an annuity or a promissory note, and can end up being in a much better financial position without an annuity or a promissory note, due to the other upper layer of MassHealth law that protects income for the community spouse.

At present, the community spouse has the absolute right to an income of at least 2,288.75 per month. This is known as the Minimum Monthly Maintenance Needs Allowance (“MMMNA”). If shelter expenses exceed 30% of this figure, or $689.63, or if a disabled child lives at home, the community spouse is often entitled to keep a higher MMMNA. If the Social Security and pension payable in the name of the community spouse is less than the $2,288.75 figure, at the end of the MassHealth application process the community spouse is allowed to keep some or all of the institutionalized spouse’s income to be brought up to the MMMNA.

If the needs of the community spouse are greater than $3,715.50 per month, a higher amount of income can sometimes be preserved for the community spouse via the fair hearing appeal process, where the need to keep the other assets has to be proved to maintain the financial ability to remain in the community.  A common situation where need can be fairly easily proved is where the community spouse is living in an assisted living facility and needs to be there due to frailty, medical condition or other special needs.   Once the need to be in assisted living is established, the appeal is primarily about numbers and prevailing interest rates, so the elder law attorney can often handle it alone without the community spouse having to go to the hearing.

Another option to retain greater income for the community spouse is a Probate Court procedure known as separate support.  Since both spouses need legal representation in court, it is important that estate planning be done well in advance so that the institutionalized spouse has a thoroughly-drafted durable power of attorney that allows the appointed agent or attorney-in-fact to hire a lawyer.

When spenddown and appeal options are determined by an elder law attorney as potentially unsuccessful, the community spouse can often purchase certain types of immediate annuities and promissory notes, where the assets used to make the purchase then change character and are treated as the community spouse’s protected income.

One other option available to the community spouse, but not often done in Massachusetts, is known as spousal refusal, where the community spouse refuses to cooperate in the payment process.

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By Brian E. Barreira | Comments (0)

Minimum Monthly Maintenance Needs Allowance for Nursing Home Resident’s Spouse Is Now $2,177.50 until 6/30/2022

July 29, 2021 – 3:39 pm

by: Brian E. Barreira, Esq.

When one spouse is living in a nursing home and the other spouse is living anywhere else, the spouse who is not living in the nursing home (who is known under federal Medicaid law as the “community spouse”) is allowed by MassHealth to keep some (or sometimes all) of the nursing home resident’s income through an income allowance known as the Minimum Monthly Maintenance Needs Allowance (MMMNA).  Every July 1st, this figure changes based on federal poverty level guidelines.  The MMMNA has now been increased to $2,177.50, effective July 1, 2021 and continuing through June 30, 2022.  (This MMMNA figure is the same in 48 states; Alaska and Hawaii have higher figures.)

The income calculation  for the community spouse does not end there.  If certain basic household expenses are more than 30% of the MMMNA, which is $653.25, the community spouse is entitled to keep an extra amount of the couple’s income.  This extra income is known as the Excess Shelter Amount (“ESA”).  Between the MMMNA and the ESA, the community spouse can now be entitled to as keep as much as $3,259.50 of the married couple’s total income.  If even more income is needed, such as where the community spouse is living in an assisted living facility, the community spouse can request a fair hearing and attempt to prove the need for more than $3,259.50 of the married couple’s total income.  In some cases, the community spouse would need more than $3,259.50 due to the costs of an assisted living facility, but would be required at the fair hearing to prove the need to live there.

Utilizing the MMMNA provisions in Medicaid/MassHealth law is always better than purchasing an immediate annuity with excess assets, since all payments from the annuity are treated as income, and taking that step ends up reducing the amount of the married couple’s income that the community spouse could otherwise keep.  Unfortunately, due to the asset rules under Medicaid/MassHealth, in many situations the community spouse has no choice but to purchase an immediate annuity with excess assets.

By Brian E. Barreira | Comments (0)