It’s hard enough dealing with the emotional impact of a spouse residing in a nursing home. But the financial stress of paying for the cost of long-term care—averaging $15,000/month in Connecticut—can be devastating.
Many spouses seek Medicaid benefits to cover the cost of nursing home care. In fact, 70% of Connecticut nursing home residents receive Medicaid, and for married couples, there are many ways to protect assets while ensuring financial eligibility.
A recent Connecticut Superior Court case—Valliere v. Bremby—now makes it easier for spouses to retain what is, in some circumstances, a significant fixed income (social security, pension, fixed annuity payments, etc.) through a planning technique that can be used in probate court.
How Medicaid works for married couples
A nursing home resident may not have more than $1,600 in total assets for Medicaid eligibility.
But in the case of a married couple, the healthy spouse is entitled to retain certain exempt assets—specifically a car and home (of any value) and one-half of all liquid assets, capped at $119,220.
The healthy spouse is also entitled to receive monthly income of as much as $2,980—whether the source is from the ill or healthy spouse. In cases, though, where the ill spouse, let’s say the wife, has a very high income, she could never divert more of her own income to her husband than what was necessary for her husband to receive $2,980/month. She would need to pay the excess to the nursing home as a monthly co-pay.
What the case says
For starters, the State may appeal the case, so stay tuned!
But this case involved an ill spouse under a conservatorship in the probate court. Her husband sought a spousal support order of her entire monthly fixed income, which the court granted.
The husband applied for Medicaid and the Department of Social Services (DSS) granted the application but ignored the probate court order, directing the husband to pay the nursing home with his wife’s monthly fixed income.
The Superior Court disagreed with DSS and ordered the agency to comply with the probate court order, meaning that the husband was permitted to retain his wife’s income.
It’s important to note that seeking a spousal support order in probate court requires the appointment of a conservator, but one can do so under what is called a voluntary rather than an involuntary conservatorship, the latter requiring proof of the individual’s incapacity. In other words, seeking a spousal support order can be done in a planning context to preserve income—one does not need to prove any cognitive or physical incapacity for the probate court to have jurisdiction.
What does this mean for Medicaid planning?
As noted in a prior blog post about annuities for Medicaid planning, there are planning techniques for spouses to preserve a considerable amount of assets. The potential benefit now, as a result of this case, is that there are now planning options to preserve the institutionalized spouse’s income.
This is truly big news and the ramifications are significant. Especially for spouses who receive a very large pension. Now, instead of capping the amount that the healthy spouse receives under the Medicaid regulations, a probate court can order that a higher amount should be ordered.
Stay tuned for updates!