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When Can a Healthy Spouse Keep More Than Half the Assets Under Medicaid Rules

Janeâs husband, John, was recently hospitalized and nursing home care was looking more than likely.  At that time, their assets totaled approximately $150,000 (not including their home and one car, both of which are âexemptâ for Medicaid purposes). Jane went to the Board of Social Services to see what benefits would be available to help her pay for her husbandâs nursing home costs. The caseworker explained to Jane that, upon application for Medicaid benefits, the state will total all of the assets she and John own on the day he entered the nursing home (the âsnapshot dateâ). The state will then divide their assets in half (âdivision of assetsâ) and Jane is entitled to keep one-half of the coupleâs assets, but only up to a maximum of $109,540.  John will qualify for Medicaid once his âhalfâ of the assets are spent down below $2000.

Jane and John needed to spend their assets down to $77,000 before qualifying John for benefits. Jane was distraught at the idea of having to spend her life savings â what about her own health care costs?  A social worker at the hospital recommended that Jane contact an elder law attorney to see if there were ways they could preserve more of their assets. When we met Jane we explained that there was a way she would be able to increase the amount of assets she is entitled to keep. Here is how.


Jane and John owned their home free and clear, with  no mortgage. It was no problem for them to take a home equity line of credit in the amount of $100,000, since their home was worth approximately $400,000. Jane immediately borrowed $70,000 against the line, before John entered the nursing home. By doing so, she increased the amount of assets at the snapshot date from $170,000 to $220,000.  This meant that Jane could keep $109,540 and the couple would need to spend the remaining assets down to $2000.  In other words, the couple would have to spend $110,460 before John could qualify for nursing home benefits.

 After John entered the nursing home we instructed Jane to repay the line of credit leaving another $40,440 to spend down.  Paying the nursing home and other bills quickly accomplished that and we were able to get John Medicaid.  The end result was that Jane kept nearly $110,000 of their combined $150,000, much needed money considering she was also going to lose some of Johnâs income and could very well outlive John by 5 years or more.

 A word of caution.  This scenario is fact specific to Jane and John and should not be considered without proper counseling. The bottom line, however, is that before you start spending down, you should seek advice from someone who knows the Medicaid laws.