Don’t be mistaken, this information is just as important, if not more important for those of you who are young and have time to make smart choices to prepare for later years.
Until I started working with families who were navigating the waters of long term care in a facility aka, I hadn’t heard of the Spousal Impoverishment Protection Law. Learning about it was literally a jaw dropping experience. There is a lot to this subject that is really important to know. I’m going to try to make this short and high level but believe me, this is a subject that is worth learning about; if you aren’t familiar with it, I can comfortably say you will probably be shocked.
In the Omaha Metro Area, long term care in a facility can realistically cost $50,000 to $90,000 a year, depending on the facility and the level of care needed. As you can imagine, costs like this can go through retirement savings in a hurry. The average stay in a long term care facility is 3 years. It can be lower for those with severe physical ailments and much longer for those in good physical health, but suffering from cognitive difficulties such as dementia.
Medicare does not cover long term care. So what happens when a person is receiving long term care and they are running out of money to pay for it? They turn to Medicaid. Twenty percent of Nebraska Medicaid funds go to caring for the elderly in facilities. How do people get Medicaid to pay for their long term care? They have to become eligible for Medicaid by first exhausting nearly all of their personal resources. For a single person, this means they can retain $4000 in assets and a prepaid funeral. Any income they have will go to the state and existing insurance like a Medicare supplement. They are allowed to keep $50 a month for personal expenses, i.e, haircuts, clothing, shoes, entertainment, etc.
When there is a spouse, it gets much more complicated.
From the (SHIIP) Senior Health Insurance Information Program Brochure put out by Nebraska Dept of Insurance:
Under the Spousal Impoverishment Protection Law, the spouse who remains at home retains his/her personal income. This includes Social Security, pensions, interests, dividends, etc.
The spouse in the nursing home will be required to use his/her income to pay for his/her care, except for a personal allowance of $50 per month ($90 per month for veterans).
After the income has been split, if the spouse at home gets less than $2,114 every month, he/she may keep part of the nursing home spouse’s income, giving the spouse at home at least a monthly income of $2,114. (keep in mind this extra from the spouse would only last as long as that spouse is still living and receiving an income)
If the spouse at home has to pay high rent, mortgage or utilities, he/she may be able to keep more of the nursing home spouses income.
Most assets (such as bank accounts, stocks, bonds, etc.) are considered as joint assets between a husband and a wife under the spousal impoverishment Protection Law. It does not matter in whose name they are placed.
The spouse at home is entitled to keep at least half of all countable assets, within the following guidelines:
Minimum: at least $25,284 in 2019 Maximum: up to $126,420 in 2019
There is more to this subject that is important to know about; particularly the 5 year look back on the transfer of assets. I will share some information on this in Part Two that will be posted in a day or two.
Links to resources used in this post:
There are things you can do to help protect yourself and/or your spouse. Please give me a call to discuss the options as well as get a referral to an attorney that specializes in helping people prepare and retain assets and income for their later years. Lisa Kennedy 402-686-0230
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