What if Both Spouses are in a Nursing Home?

Krause Financial

Disclaimer: Since Medicaid rules and insurance regulations are updated regularly, past blog posts may not present the most accurate or relevant data. Please contact our office for up-to-date information, strategies, and guidance.

In a scenario involving a married couple, statistics show it’s usually the husband that will enter the nursing home first, while the wife continues to reside in the community.  However, on occasion both spouses will be in the nursing home at the same time.  The monthly costs incurred as a result of two nursing home stays can be catastrophic to a family’s net worth.  What do you do?  How can you establish Medicaid eligibility simultaneously?  Do you transfer all assets to one spouse and qualify the other?  Technically, there is no community spouse though.  There may be a better option.

Rather than a traditional spousal Medicaid Compliant Annuity plan, wherein Medicaid benefits would be provided on behalf of only one spouse’s nursing home care, the better route may be to do a gifting plan – each spouse purchases a Medicaid Compliant Annuity.


Why should each spouse purchase a Medicaid Compliant Annuity, rather than just one for both spouses?

Most states do not have a crystal clear policy where joint institutionalization is concerned.  Traditionally, when both spouses are institutionalized and seeking Medicaid eligibility, they are treated as individuals.  Furthermore, when one spouse transfers an asset that results in a penalty, the penalty must be apportioned between the spouses if both are in an “otherwise eligible” situation.  [Transmittal 64 § 3258.5(J)]  That being said, separate Medicaid Compliant Annuities are a seamless method of establishing the “otherwise eligible” factor.

One annuity purchase would provide one spouse with too much income, and leave the other with not enough.  By structuring each spouse’s Medicaid Compliant Annuity to take each spouse’s care costs and income into consideration, you’re able to generate the necessary income to almost meet the nursing home costs.  This will ensure the divestment penalty period commences accordingly.

Determining exactly how much to gift and invest in each spouse’s annuity can be trying, and often entails several revisions.  Keep in mind that my office offers complimentary planning, and can devise the calculations for you.


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