I asked Google the following question:
I am in Michigan. My spouse is in a nursing home. Can I save all our assets and have Medicaid pay the nursing home?
No, you cannot save all of your combined countable assets, but Michigan’s spousal protection rules allow the healthy spouse at home to keep a large protected share.
When one spouse enters a nursing home and applies for Medicaid, Michigan looks at the couple’s combined assets rather than just the sick spouse’s money.
The answer is wrong. There are at least 5 ways a spouse can save all assets:
- The spouse can spend all assets above the Community Spouse Resource Allowance (CSRA) on exempt assets. For example the CS can spend all excess assets on home improvements. An example would be spending on long put off home repairs such as a new roof. The CS can make the home safer for an elder such as putting in a ramp, modifying the bathroom so that it is safer to use such as removing a bath tub and putting in a shower and so on.
The problem with this approach is that the spend down may not leave enough money for the spouse’s future needs
- The spouse can purchase an irrevocable immediate annuity. The annuity must be set up so that it pays out entirely within the CS’s life expectancy.
There two problem with this strategy. The annuity lessens or eliminates the CS income allowance. Second, if the spouse experiences a need for money in excess of the annuity payout then the spouse may need to cash in the annuity with a significant loss Thein money.
- The spouse can hire an attorney and petition the probate court for an award of all the couple’s assets. There is some risk to this strategy in that the case may be assigned to a judge that believes the assets are in excess of the spouse’s need.
- The spouse can give the excess assets to a disabled person.
The problem with this approach is the same as the above. The spouse may later need those assets.
- The spouse can establish and fund a sole benefit trust. This is by far the preferred method. The only limitation to the SBT is that it must provide that all assets must be distributed to the spouse within his or her life expectancy. Medicaid considers such payments as “income in the month received and it will decrease or eliminate the CS Income Allowance. The cure to this is to provide for distribution once every year and the CS will have only one month with no CSIA. Conversely the trust may provide for a greater than the annualized payout if the spouse experiences a period increased need. We note that the SBT must provide for annualized payout otherwise Medicaid would deem the trust to be an “countable asset.”