Question: My father has been taking care of my mother -- who was diagnosed with Alzheimer’s Disease -- for nearly four years at home; however, the last several months have proven to be most difficult for him, and we are trying to understand how, if Mom is admitted to a nursing home, Dad’s assets can be protected. Are there set formulas dealing with the amount of income and assets Dad will be able to keep? How does this process work?

Answer: Recognizing that the cost of nursing home care will exhaust the lifetime savings of most elderly couples very quickly, Congress enacted The Medicare Catastrophic Coverage Act of 1988. Applicable in all 50 states and the District of Columbia, MCCA established what are called “spousal impoverishment rules”. These are specific Medicaid eligibility rules that apply when one married spouse needs nursing home care (or qualifies for certain community waiver programs) in order to protect the income and some of the resources for the non-nursing home spouse. These special rules apply when the spouse in the facility is expected to remain there for at least 30 days. It is important to remember that while federal law sets forth certain guidelines, the applicable law and regulations differ from state to state and are based upon medical condition, resources, and income. Below are the resources and income limits but we will not touch on the medical conditions.

Resources: At the time the Medicaid application is made, the state agency in charge will conduct an assessment of the couple’s resources which, for this purpose, are combined. Then certain exemptions are applied for the residence, household goods, an automobile, prepaid burial contracts, and other non-countable resources. The couple’s combined countable resources are then compared to the “Protected Resource Amount” which will vary from state to state and, for 2008, will be between $20,880 and $104,400 depending on where you live.

After subtracting the state’s PRA from the couple’s combined countable resources, the amount then remaining will be considered to be attributable to the nursing home spouse as countable resources. If this amount is below the state’s resource standard, the nursing home individual will be eligible for Medicaid. Once resource eligibility is determined, the assets of the community spouse are not attributed to the nursing home spouse.

Income: At no time will the non-nursing home spouse’s income be considered to be “available” to the nursing home spouse as, unlike the resource rules, the married couple is not considered to be a couple for income qualification purposes. In some states, if the nursing home spouse’s income exceeds the state’s income limits, the use of an income trust is authorized; in others, it is not.

After Medicaid eligibility is established, there is a calculation made of how much, if anything, the spouse in the nursing home must contribute to the spouse in the community for his or her support. Deductions taken from the total income of the nursing home spouse each month include (1) a personal needs allowance of at least $30; .(2) an amount equal to the medical expenses incurred by the nursing home spouse, and (3) an amount, if any, which will to bring the non-nursing home spouse’s monthly income to the state maximum which, for 2008, is between $1,711.25 and $2,610.00. If the non-nursing home spouse has income that exceeds the amount established by the state, there is no deduction from the nursing home spouse’s income for this purpose.

After these and possibly other deductions depending on the circumstances, the balance of the nursing home spouse’s income will be contributed to his or her care and the state will pay any balance.

Taking the NextStep: Depending on the circumstances, this can be a complicated process. In the space allotted to us, it is impossible to explain every nuance of a very complicated area of the law, so please contact a qualified attorney to answer your specific questions.