How does having a spouse affect Medicaid eligibility?

There are many Medicaid programs, each with their own rules for qualification. This post describes the rules for Facility Medicaid eligibility in Iowa for the year 2020. Each year, DHS may adjust any dollar amounts listed below, so all figures are only accurate for the 2020 calendar year.

A previous post outlined the Medicaid rules for a single applicant. Here are those rules again as a refresher:

Rule 1) The applicant must be 65 years of age or older or deemed disabled by the state or federal government.

Rule 2) The applicant’s gross income must be under $2,349 per a month. 

Rule 3) For a single applicant, the applicant’s total value of assets must be below $2,000.

In that post, we explained that Iowa Medicaid has protections in place to preserve the financial stability of the spouse living at home, so having a spouse affects the way the Medicaid rules are applied to an applicant. We will explain how the above rules apply in the situation of a married applicant below.

Rule 1

Nothing changes for this rule. The applicant must still be over the age of 65 or deemed disabled.

Rule 2

The applicant’s gross income must still be under $2,349 per a month or the applicant must have a Qualified Income Trust (also called a Miller Trust) in place.

However, what if the spouse is primarily supported by the spouse in the facility’s income?

Don’t be concerned. Remember those protections we mentioned above? Depending on the spouse at home’s income, the spouse in the facility is able to divert their income to their spouse in order to protect their quality of life out in the community. The amount the government has determined as protected is called the Monthly Maintenance Needs Allowance. For this calendar year that amount totals $3,216 per a month, which means the spouse in the facility may divert their income to their spouse in the community until the spouse at home makes $3,216 per a month in income.

Here is an example to demonstrate this rule in practice:

Bob is on Medicaid, and Linda is living at home. Bob makes $3,000/month in gross income, and Linda makes $2,000/month in gross income. DHS subtracts Linda’s income of $2,000 from the current Monthly Maintenance Needs Allowance of $3,216, and they decide that Bob may divert $1,216 of his monthly income to Linda while he is on Medicaid.

There are other beneficial options available for those who are worried about the spouse at home’s income. Depending upon your assets and financial situation, a Medicaid Compliant Annuity may be an option worth pursuing. This type of annuity complies with Medicaid rules and allows a couple to shift assets into income for the spouse at home. Let us know on our Facebook page if you’d be interested in a post about this topic.

Rule 3

The asset limit for the applicant is $2,000; however, a married applicant is not attributed the entirety of the couples’ assets when they apply for Medicaid. The state splits the total value of the couples’ assets between the spouse at home and the applicant. The spouse at home is allowed to keep the value of their allocated assets, while the applicant must spend down their portion to meet the $2,000 asset limit.

To further complicate this, the way the total assets are split between the two spouses depends upon the total value of the couples’ assets. DHS will look at the total shared assets’ value as of the applicant’s attribution date and use this to determine the amount the spouse at home is allowed to keep. The breakdown of the different asset ranges and how DHS allocates assets for that range are explained in detail below. We have included example dollar amounts to help illustrate how these allocations function in reality. Feel free to skip to your range to read more about how this rule would apply specifically to your family.

You may be wondering how exactly to figure out your shared total value of assets. Here’s an explanation of what DHS considers an asset versus what is considered a source of income.

Less than or equal to $27,728

The spouse at home will be attributed the spouses' combined assets.

Example: Bob and Sue have $20,000 in total assets. Bob is applying for Medicaid to pay for his nursing home care. Sue is allotted the total $20,000 of assets to keep.

Between $27,729 and $51,456

The spouse at home will be given a maximum of $25,728, and the institutionalized spouse will be given the remainder. This remainder must be spent before the applicant is considered eligible.

Example: Bob and Sue have $40,000 in total assets. Bob is applying for Medicaid to pay for his nursing home care. Sue is allotted $25,728 to keep, and Bob is allotted the remaining $14,272. As a Medicaid applicant, Bob is allowed an asset limit of $2,000. So in order to be eligible, Bob must spend at least $12,272 ($14,272 - $2,000 = $12,272).

Between $51,457 and $257,280

Assets are divided 50/50 between spouses.

Example: Bob and Sue have $100,000 in total assets. Bob is applying for Medicaid to pay for his nursing home care. Sue is allotted $50,000 ($100,000 / 2 = $50,000) to keep, and Bob is allotted the remaining $50,000. As a Medicaid applicant, Bob is allowed an asset limit of $2,000. So in order to be eligible, Bob must spend at least $48,000 ($50,000 - $2,000 = $48,000).

Greater than or equal to $257,281

The spouse at home will be given a maximum of $128,640, and the institutionalized spouse will be given the remainder. This remainder must be spent before the applicant is considered eligible.

Example: Bob and Sue have $500,000 in total assets. Bob is applying for Medicaid to pay for his nursing home care. Sue is allotted  $128,640 to keep, and Bob is allotted the remaining $371,360. As a Medicaid applicant, Bob is allowed an asset limit of $2,000. So in order to be eligible, Bob must spend at least $369,360 ($371,360 - $2,000 = $369,360).

In an upcoming post we will explain how estate recovery works when a married Medicaid recipient passes and what to expect from DHS. Have more questions? Submit them here, and we’d be happy to answer them either directly or in an upcoming post. Be sure to follow our Facebook page for updates on posts to our FAQ.

Click here to contact our Certified Medicaid Planner and receive your free phone consultation, or call us at (515)344-4284 to schedule your appointment.

These posts are purely informational and not to be construed as legal or Medicaid planning advice. We may describe general best practices or give examples; however, without considering your unique situation, this is not necessarily your best option. Please contact us for your free consultation to receive custom-tailored advice.