There are countless articles on the web that talk about how assets affect Medicaid eligibility. However, I see very little discussion about income, especially when one spouse is institutionalized and one stays at home ("community" spouse). How do the "community spouse impoverishment" rules work in determining how much of the couple's total income can be retained by the community spouse? Also, I heard from an attorney that some of the assets in excess of 50% of the couple's total assets can be used to purchase an annuity that will help make up the difference between the community spouse's income and the state-mandated "community spouse living allowance". How does that work? My father-in-law will likely be going to assisted living soon, and we need to do whatever we can to make sure his wife has sufficient resources to remain at home.
It was probably a SPIA that was being touted....Single Premium immediate Annity. It’s specialized underwriting so not any guy holding an insurance license does these. They usually are done by the dz of so specialized underwriters which work directly with FInancial advisors or CELA level of elder law attorney.
Here’s my understanding of SPIA:
on couples Medicaid CS is allowed to have thier own assets separately from NH spouse. Most states abt 128k. Also CS income usually is NOT a factor for the NH spouse eligibility. Only the NH one has to be impoverished for assets and have their monthly income at or below the max allowed by your state to be financially “at need” for LTC Medicaid. Most have income at 2,100 a mo.
What a SPIA does is pays the CS monthly income.
However SPIAs need to be Medicaid compliant so the benefits of doing one work best for a CS who is younger, has a good bit of liquid $ (as it could be a minimum $$$buy-in like 250k) and so likely to outlive the annuity. Annuities are imo a #s game as you have to have it end point within IRS actuarial tables to be compliant. If couple are both in thier 80’s, the CS cannot get one actuarial sound and low enough in payout to work for Medicaid. Honestly it’s not a DIY, the atty & the FA figure it out, see if it’s feasible to do and then shop it out for their client.
Personally I hate annuities, I think they tend to be sold under fear factor to gullible folks. But SPIA is a unique creature, only good for a spouse.
I know of a couple of women who have done them, there is a guy on this forum who did one. They all had a good bit of $, like 100-300k beyond the basic 128k in CS assets, they all were relatively healthy &/or younger so outlived the NH spouse and had their expenses pretty tight.
the 1 I know best was 2nd wife, 25 yrs age diff, our kids did school & sports stuff. The hubs young vibrant 70’s was in bad auto accident, TBI. His insurance did max paid out for care, so for him to stay extended specialized LTC facility it was private pay or into the couple of Medicaid beds. She was at wits end, sold weekend place, quietly selling stuff, $ running out, she was considering divorce, selling their home. It was the divorce atty who suggested the SPIA. He took almost all $ and put it into a SPIA which paid her the lowest feasible income to her at longest possible pay out (in her 70’s) but actuarial sound. He kept it low so that she could also file to get the max CSRA waived to her from hubs Medicaid copay to the NH. He also killed the idea of selling home or paying off car as kinda want to show debt service above the $ that income your SPIA paid her each month to get the CSRA $. CSRA varies by state; max in some is high (like TX is 2800) but you have to show that it’s needed. There was a poster on this forum whose mom had extraordinary heating costs and cancer meds, her dads copay to the NH was under $50 a mo as his wife needed his all income less $50 to maintain living in her community. I’m remembering her folks SS$ was on the low side. But my point is, CS needs documentation for CSRA.
Couples planning seems to have lots of interactive parts that all have to get in place with $ shifted BEFORE Medicaid is ever applied for. Not a DIY, they need to use thier $ & find a CELA atty.
Also please please check to see IF your state’s LTC Medicaid program covers AL. For AL it’s a waiver. Most states don’t or do it in a very limited way... like 10 beds out of 100. Often you hear eligible after 2 years of private pay; cause likelihood is within 2 years enough will either move to NH, or MC or die; so there's a bed opening. You need to find out if it’s a guaranteed Medicaid bed in 2 years,
When there is a Community Spouse assets are split. The one needing care, their half needs to be spent down. Not sure how they work SS. From what I remember is the Annuity is where the Community Spouses half goes. If that money is not used up by his/her death it reverts back to Medicaid to car for the spouse in a home or to recoup what Medicaid put out for the spouse in care. I would think if the CS needs care, the annuity will be used for that care.
With my GFs parents he needed care. They had 60k in the bank. That was split his half being spent down then Medicaid applied for. She passed before him never using the 30k. Reverted back to Medicaid for his continued care. She must have gotten enough between their SS and pensions to live on. She did have a house and a car.
OP, I would be careful of annuities in general. REAL careful. Know how to read ALL the fine print if you go this way.
If I were you I would consult an Elder Law Attorney. You cannot afford to do this wrong. And please don't go to some near criminal attorney who is wanting to do all kind of asset protection trickery. There are RULES. Go to someone who knows them. I hope some of the smarter minds on these subjects will chime in for you.
One positive thing about COVID-19 is those “protect your $” rubber chicken luncheon/ dinner seminars sponsored by “wealth advisors” are not happening. Basically shelling & selling annuities to fearful worried elders. The more clever ruthless ones go onto doing reverse mortgages. Same fear mongering.