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What if my Spouse needs Nursing Home Care?
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Paying for the High Cost of Care. Today in the greater Boston area the cost of nursing home care averages more than $100,000.00 per year. There are only three ways to pay: (1) Long-term care insurance (LTCI), an insurance especially designed to pay for this care; (2) payment by the nursing home resident and their family with their savings and possibly the sale of other assets; (3) attaining eligibility for MassHealth which will then make payments directly to the nursing home.

 
Obtaining MassHealth/Medicaid eligibility has become more difficult since laws and regulations were amended in February of 2006. Despite those changes, proper planning can help families protect assets.
 
Mass Health/Medicaid Eligibility.  Married couples face difference eligibility standards than a single individual. A single person will be eligible for MassHealth only when they have less than $2,000.00 of countable assets. When married, the nursing home spouse must have less than $2,000.00, the spouse remaining at home is allowed to keep an additional $101,000.00. The family home is exempt and not considered part of the $101,000.00 that the spouse can keep. All other assets in excess of the total  $103,000.00 allowed, must be spent before MassHealth will pay.
 
Financial Losses for Spouse at Home. Married couples facing nursing home care generally are retired and living on fixed incomes. Typically they have retirement accounts and bank funds which produce income to help pay bills. If all assets in excess of $103,000.00 must be paid to the nursing home, then the financial health of the spouse at home is threatened. The payout of all these excess assets to the nursing home not only reduce the principal but all the income that it produced.
 
This payment of assets over to the nursing home can impoverish the spouse. In addition, the situation often worsens if the nursing home spouse’s  retirement benefits die with them. The spouse still living at home then incurs the loss of retirement funds, bank funds and the spouses retirement or pension. The sad situation can be largely avoided with proper planning.
 
PROTECTING THE SPOUSE AT HOME AND THE FAMILY’S ASSETS.
 
Long-Term Care Insurance. Long-term care insurance (LTCI) is the only insurance that pays for lengthy nursing home admissions. Most of the policies will also pay for care in assisted living facilities and some types of home health care. The premium for LTCI can be substantial and differs dramatically based on the age and amount of coverage. Good LTCI coverage will substantially protect any spouse and family’s assets. This insurance is a worthwhile option to consider.
 
Annuity For A Spouse. Current Mass Health regulations limit the nature of the annuities that can be purchased if nursing home care is required. By paying careful attention to the annuity regulations a spouse at home can make an annuity purchase and protect a substantial amount of any assets in excess of $101,000.00. This unique annuity must return all the purchase money to the spouse at home within their life expectancy and begin making payments back immediately after the annuity is purchased. As an example, a couple who had $301,000.00 in the bank could protect the first $101.000.00 as allowance for the spouse at home,  and also purchase an annuity for the spouse at home in the amount of $201,000.00. In this manner all their assets could be protected.
Transfers To Spouse. Transfers to the spouse who remains at home is often a long term benefit. It is common for the family home to then be transferred from ownership between husband and wife to sole ownership. In conjunction with a properly drafted Will, this will serve to protect assets if the spouse at home dies first.
 
Changes To Spouse’s Will. The Will of the spouse remaining at home should be changed so that assets do not pass directly to the spouse in the nursing home. Without this change, if the nursing home spouse is the second to die, then all assets will go to the nursing home. The needs of the nursing home spouse will be addressed by having their share held in an appropriate trust that will protect those assets.
 
OTHER TRANSFERS. One of the legal changes made in February of 2006 under the Deficit Reduction Act adversely effects transfers. Now transfers made within five years of requiring nursing home care create an eligibility problem. Transfers are still effective but they must be made sooner rather than later.
 
CONCLUSION. Careful planning can provide options that will help protect the financial well being and independence of the spouse at home. Early planning options for the purchase of long term care insurance or transfers of assets are still available. Other planning options including the purchase of an annuity for the spouse at home, transfers to the spouse and changes to estate planning documents such as the Last Will and Testament also can be helpful.
 
Please note that this is a general and somewhat simplified description of a complicated issue. Please be sure that you obtain professional advice and carefully weighed all options before planning strategies are implemented.
 
As always, the attorneys at Russell, McTernan, McTernan & Fruci, LLP will be happy to answer any questions you may have regarding these issues.
 
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Content on this web site is for informational purposes only and does not constitute legal advice.

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