By Estate Planning Attorney Rick Law, at the Estate Planning Center of Law Elder Law in Aurora, IL.
When it comes to prenuptial or antenuptial agreements, if one spouse has to go to a nursing home, both spouses are responsible to pay for the care. That means your prenuptial or antenuptial agreement may not be worth the paper it is written on!
When one spouse needs nursing home services (the “institutionalized” spouse) and applies for help from the state through the Medicaid program, there also is a limit on income for spouse who is still living at home (the “community” spouse)
For example, the “minimum monthly marital needs allowance” (MMMNA) in Illinois is $2,739 per month. The best way to describe the MMMNA is that the state of Illinois does two levels of testing to determine whether or not there would be some sort of diversion of the institutionalized spouse’s income to the healthy community spouse.
Here’s a pair examples to illustrate this point.
MMMNA Example No. 1: The husband has a Social Security check of $1,200 per month and a pension of $1,200 a month. The wife has a Social Security check of $600 a month. So, the husband is getting $2,400 a month. The only income that’s coming to the wife in her name is the $600 social security check. Now, the husband needs to apply for Medicaid nursing home benefits because he has Alzheimer’s.
In Illinois, the only amount of money he can keep to spend on himself is $30 per month, as a personal-needs allowance. The only other deduction allowed from the husband’s income is his supplemental insurance payment.
If the husband pays $220 for his Medicare supplement there is $2,150 left from his $2,400 income. In Illinois, the MMMNA is $2,739. What does that mean? The wife has only $600 income of her own, so $2,139 can be diverted to the wife from what is remaining of her husband’s income. The remaining $19 must be paid to the nursing home each month. The wife must continue paying the electric, gas bill, and grocery bill; auto gas, insurance, and maintenance; house maintenance, insurance, and taxes (hopefully not a mortgage payment); her own health insurance supplement, doctor, and pharmacy bills; and her own personal everyday needs on $2,739 per month.
When the husband dies, she will lose her $600 and probably all or half of his pension. She will go from receiving $2,739 a month down to $1,200 or $1,800 a month.
Now, by changing a few numbers, we can illustrate how harsh the MMMNA can be for individuals that are used to a slightly different lifestyle.
MMMNA Example No. 2—Drastic Lifestyle Alteration: In this example, the community spouse still has her $600 Social Security check from working at a bank for a few years, but she became a teacher later in life and is now a retired teacher. She has a small income, but she actually wound up having a very large teacher’s pension and is getting $2,100 a month for her pension. Her husband is also a retired teacher and he was a principal and has $4,000 a month for his teacher pension.
The income in his name is $4,000. The income in the wife’s name is $2,700. When the husband applies for Medicaid assistance, he only gets to keep $30 for the personal-needs allowance. His teacher pension provides his insurance, so there’s no deduction for a Medicare supplement.
Because the wife’s income is $2,100 per month and she’s only allowed $2739, she will only get to keep $39 per month of her husband’s income. What happens to the rest of his money every month? It must be paid to the nursing home.
Here we have a wife who was used to living on $6,700 a month for two people, and now she’s down to $2,739. That’s quite a change. She still has to pay for electric, gas, groceries, insurance, maintenance, real estate taxes, her own health insurance, doctor and pharmacy bills, and her own personal needs.
These examples illustrate why people who think that Medicaid is only for poor people need to rethink that idea.
Too many families needlessly lose everything they have. Don’t let that be you. If you need help building a fortress around your estate to protect it from creditors, predators, and the cost of chronic disease, give our office a call at 800-310-3100. Your first consultation is absolutely free. We’ll let you know what steps you need to take, right now, to protect yourself and your family. Call now, because when you’re out of money, you’re out of options!
Rick L. Law, Attorney, Estate Planner for Retirees.
Rick was named the #1 Illinois elder law estate planning attorney by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law Elder Law, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future. Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care. Call 800-310-3100 for your free consultation now!