“Will I lose everything if my spouse has to go to a nursing home?” is a common question I get asked as an elder law attorney. Putting your spouse into a nursing home is difficult. The stress caused by wondering whether you will lose everything you have worked for makes it even more difficult.

As a healthy spouse, you 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 Medicaid eligibility purposes.

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 a healthy spouse, can receive your spouse’s income depends on your own income, and if you need the extra income to support yourself.

When your spouse enters a Medicaid 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).

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Bill Miller is an estate planning and elder care law attorney with offices in Anniston and Birmingham, Alabama. We help families put plans in place so that everyone knows their wishes if something happens to them and to help them protect their life savings from the devastating costs of long-term care.

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Will I Lose Everything if my Spouse Goes to the Nursing Home?

One of the most common concerns when a spouse requires long-term care in a nursing home is the potential loss of assets. Many people worry that they will have to give up everything they own in order to pay for the cost of care. However, it is important to understand that there are options available to protect your assets and ensure financial stability during this challenging time.

Medicaid, a joint federal and state program, is often the primary source of funding for nursing home care for those who cannot afford the costs themselves. Eligibility for Medicaid is based on both income and asset limits, but with proper planning, it is possible to protect certain assets and still qualify for benefits.

One common strategy used to protect assets is called Medicaid planning or asset protection planning. This involves legally and ethically rearranging your finances to meet the requirements for Medicaid eligibility while preserving assets for the healthy spouse or future generations.

One option to consider is the establishment of an irrevocable trust. By transferring assets into an irrevocable trust at least five years before applying for Medicaid, those assets are no longer considered countable for eligibility purposes. It is crucial to plan ahead and be aware of the five-year look-back period, as any transfers made within this time frame may result in penalties or ineligibility for Medicaid.

Another useful tool is the use of a Medicaid annuity. This financial instrument allows you to convert excess countable assets into an income stream that is paid to the healthy spouse while the other spouse is in a nursing home. By converting the assets into an income stream, they are no longer considered countable for Medicaid eligibility.

Additionally, certain assets are typically exempt from Medicaid eligibility calculations. The healthy spouse’s primary residence, a vehicle, personal belongings, and some retirement accounts are often exempt from consideration. Each state has its own asset and income limits, so it is important to familiarize yourself with the specific guidelines for your jurisdiction.

It is essential to consult with an experienced elder law attorney or financial planner who specializes in Medicaid planning. They can provide guidance and develop a personalized strategy based on your specific circumstances. Proper planning can help minimize the financial strain associated with nursing home care and ensure that you do not lose everything during this difficult period.

While the concern of losing everything when a spouse goes to a nursing home is valid, it is crucial to understand that there are options available to protect your assets. Medicaid planning, utilizing tools such as irrevocable trusts and Medicaid annuities, along with understanding exempt assets, can help ensure financial stability and peace of mind. Remember to plan ahead and seek professional advice to navigate the complexities of Medicaid regulations and protect your assets for the future.