What do they mean by “division of assets” when my mother is applying for Medicaid to pay for a nursing home? | Chicago Elder Law Attorney Anthony B. Ferraro

It applies only to married couples and is a phrase commonly used for the Spousal Impoverishment provisions of the Medicare Catastrophic Act of 1988. It changed the eligibility requirement for Medicaid in situations where one spouse needs nursing home care and the other doesn’t. Basically, the law says that it makes no sense to impoverish both people when only one needs to qualify for Medicaid coverage for nursing home care.

Because of this distinction, “division of assets” was created. This is basically how it works: The couple gathers all of their non-exempt (countable) assets in a review. Depending upon the rules of your particular state, exempt assets are usually: the home, personal and household belongings, a single vehicle, burial plots and irrevocable funeral plans, the cash value of life insurance (for cash surrender values up to $1,500 only) and cash (the amount varies from state to state).

These non-exempt assets are then divided into two, with the at-home (“community”) spouse allowed to retain one-half of the assets, up to a maximum of about $110,000. The other half of the countable assets must be “spent down” until a certain amount remains. The amount varies from state to state. This amount of countable assets that the at-home spouse gets to keep is called the Community Spousal Resource Allowance (CSRA).

The at-home spouse is given a monthly income floor, which is established by states individually. This is called the Minimum Monthly Maintenance Needs Allowance (MMMNA). The community spouse is allowed to keep a minimum monthly income ranging from about $1,750 to about $2,650.

In the case the community spouse doesn’t have an income of at least $1,750, she or he may take income from the nursing home spouse in an amount large enough to reach the MMMNA bottom threshold. The nursing home spouse’s remaining income (minus a persona-needs allowance) goes to the nursing home. This can help the community (at-home) spouse avoid having to dip into savings each month, which would gradually bring impoverishment.

If you’re in this situation, you should seek advice from someone who knows Medicaid law intimately well. You can find elder law attorneys in your area by visiting www.NAELA.org, the website for the National Academy of Elder Law Attorneys.  You can also find more information about Medicaid by clicking here.