In last week’s article I was discussing the common misunderstanding that spouses often have that the State can’t touch my assets if my spouse needs Medicaid. It’s simply not true and distresses people when I explain it. However, that doesn’t mean there aren’t ways to protect some or possibly all of those assets through an understanding of the rules.
As I explained last week there are countable assets and noncountable assets. Protecting more countable assets could mean purchasing a home if the couple do not own one or purchasing a more expensive one with countable assets. That works because the primary residence is an exempt asset. Another way is to purchase a new car because one vehicle is also an exempt asset and not countable. After the ill spouse is approved for Medicaid the home or the car can be sold and the healthy spouse can keep the cash even if it exceeds the countable asset limit.
Another way to protect more of the healthy spouse’s assets is to convert it to income. Medicaid counts the Medicaid applicant’s income when determining Medicaid eligibility but not the healthy spouse’s income. This is very different than the asset rules. A Medicaid compliant annuity purchased by the healthy spouse would increase that spouse’s income. The annuity must be an immediate one, meaning it must start paying the income within 30 days. It also can’t be converted back to an asset so it must be noncancelable and non-assignable. This is necessary again, because you must be able to say to Medicaid that you can’t liquidate it and spend down the asset. There are other technical requirements as well.
So, what’s the answer to the question “is my money really our money”? It depends. With the proper guidance of an experienced elder law attorney the healthy spouse is often able to keep his or her own money.