Many people are aware that Medicaid only allows someone in a nursing home to have up to $2,000 to their name. This includes money in the bank, stocks, bonds and even the cash value of your life insurance policy. If you have more than $2,000 in assets to your name, you must spend down to $2,000 in order to become eligible for Medicaid.

However, what are the rules for a married person in a nursing home? Does Medicaid allow the non-nursing home spouse to have assets over $2,000? Does Medicaid even count the assets owned by the non-nursing home spouse? What if the nursing home resident has assets and the non-nursing home spouse has no assets? How does Medicaid deal with each situation?

Medicaid addresses these situations with one basic rule. All assets of both spouses are counted together – even assets in one person’s name are considered owned by both spouses. The rule is that the non-nursing home spouse, also known as the Community Spouse, can keep ½ of all the total starting assets, up to $128,640 in 2020. However, certain assets are exempt and don’t count against you, such as your primary residence and one car.

The start date of this calculation is the day the nursing home spouse goes into the nursing home for long term care of 30 days or more. So, if the date of admission is January 1, 2020 and continues for 30 days, then the starting date of the calculation is January 1, 2020. Once assets have been spent down to ½ of the starting number, then the nursing home spouse is potentially eligible for Medicaid. So, if assets are at $240,000 on January 1, then the nursing home spouse becomes eligible when assets have been spent down to $120,000. If assets start at $300,000, then eligibility for Medicaid can be obtained once total household assets are below $128,640.

There is also a minimum amount that all Community Spouses may keep. That number is currently $25,728 and increases each year.

The assets must be spent on items that benefit either spouse. So, it would be perfectly legitimate for the Community Spouse to trade in an old car for a new car (of any price.) You can also pay off debt of either spouse. The key is that you don’t want to do any of this extra spending until after entering a nursing home for a long-term care stay of at least 30 days. Otherwise, you will almost certainly wind up spending more than is required.

My next post will speak about these rules in more detail and offer some more strategic advice.