Show #492 Airing Sunday, 9/6/09
If your spouse must enter a nursing home, how can you protect your own financial security? Nursing homes are expensive, and if you spend your life savings paying the bills, how will you pay your own bills? Thankfully, the law protects you. Here to explain your rights is my law partner, Laurie Steiner.
Question: One spouse goes into a nursing home, the other spouse is at home. Nursing homes cost $6000 a month, maybe more. What happens to the spouse at home - the spouse who's healthy?
Answer: That’s a good question, and one which couples wrestle with often.
Typically, the couple spends just about their entire life savings, until they qualify for Medicaid.
But the Medicaid rules are tough:
A couple may only keep ½ of their life savings, and only up to a maximum of $109,560.
So after spending their savings, the spouse in the nursing home can go on Medicaid, but the spouse at home may not have enough left to live on.
Question: Does this hurt women more than men?
Answer: Yes, often that’s the case.
Typically in the older age groups, women’s income from social security and pensions are much less than men’s.
So when a husband goes into a nursing home, his social security and pension goes to the nursing home.
After the couple spends their savings, the wife at home may be left to live on just a tiny income and very little savings.
I’ve seen situations where the husband goes into a nursing home and the wife winds up in the poor house.
Question: Does the law offer any protections for a spouse in this situation?
Answer: Yes. And a court case decided just a couple of months ago confirmed this important legal protection.
Here’s what the law says you can do:
- take some of your savings that would otherwise go to the nursing home, and buy an immediate annuity. The annuity will pay the spouse income for her lifetime, or a fixed number of years. That income is protected from Medicaid and the nursing home, and should give the spouse some financial security.
Question: Can you give us an example?
Answer: Sure. Let’s take a real life situation.
- Joe and Mary had a life savings of $100,000 and a small home, when Joe entered a nursing home.
- Normally, they would have to spend ½ of their savings, or $50,000, before getting Medicaid.
- And that would leave Mary with social security income of $800/month, plus savings of $50,000.
- She wouldn’t be able to pay her property tax, utilities, food and medical bills.
So here’s what she did:
- She took $50,000 from her savings and purchased an annuity which paid her $350/month.
- She still could keep $50,000 of her savings, but she raised her income from the annuity and social security to $1300/month.
- That provided her the income she needed to make ends meet.
Question: Can an annuity be used to protect a spouse's financial security?
Answer: No. The law provides very specific requirements which must be met.
The standard kind of annuity many people buy as a retirement investment does not qualify under Medicaid law.
Among other things, an annuity here:
- must be irrevocable and non assignable
- it must be actuary sound based on the owner’s life expectancy
- and the state must be named as beneficiary for anything left over at the death of the owner
It can be used to protect income for the healthy spouse, but not to pass an inheritance to kids.
Are you concerned that if your spouse goes to a nursing home, you might be left without enough to even pay the bills? Thankfully, the law provides important protections. To learn more, give Laurie Steiner a call.
