The cost of nursing home care or in-home services can be an overwhelming expense for a married couple. In Illinois, the cost of nursing home care may be paid by Medicaid. The cost of in-home services may be paid by the Illinois Department on Aging. Both Medicaid and the Department on Aging use rules for married couples to allow the spouse not applying for services to retain some assets and income. These special rules are called "spousal impoverishment" rules because the rules are designed to prevent a married couple from depleting all of their income and assets to pay for nursing home or in-home care required by one of them. These rules are often complex and confusing. This article will explain some of the "spousal impoverishment" rules that apply when one member of a married couple requires nursing home or in-home care. Because the law can change and individual circumstances vary, you may wish to consult an attorney.

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Who is eligible for assistance?

Anyone who has income and assets below the allowable limits may be eligible for Medicaid or Department on Aging coverage for nursing home or in-home services. A statement of need from a certified physician is required.

What happens to any excess funds that my spouse and I may have?

The person applying for assistance can transfer assets to his/her spouse up to the spousal asset allowance of $80,760*.

Example: Sam is a resident of a long-term care facility. His spouse, Mary, resides in their home in the community. Sam's assets consist of a $35,000 Certificate of Deposit. Mary's assets consist of a $10,000 Certificate of Deposit. Sam and Mary also own a joint savings account with a current balance of $5,000.

Because Mary's assets are below the asset allowance of $90,600, and Sam's are above his asset allowance, Sam may transfer assets to Mary to bring Mary's assets up to the maximum allowable amount. In this example, Sam may transfer all of his assets to Mary without affecting his eligibility. This is because even after the transfer, Mary will have less than the $90,600 asset limit. With all of the couple's assets ($35,000 + $10,000 + $5,000 = $50,000) in Mary's name, no assets are considered available to Sam when determining his Medicaid eligibility. However, the transfer must actually be made to Mary and all assets must be held in her name alone.

Another example: Jane is an applicant for in-home services to be provided by the Illinois Department on Aging. Jane lives with her husband, John. Jane has a $60,000 Certificate of Deposit and John has a $35,000 Certificate of Deposit. Deducting John's $35,000 from the $90,600 maximum allowance leaves $55,600. Therefore, Jane may transfer $55,600 of her $60,000 certificate to John without affecting her eligibility. If she makes that transfer, Jane will have $4,400 remaining that will be considered available to her. Jane needs to spend $2,400 on exempt assets or on her medical care in order to have assets below the $2,000 asset limit. As in the above example, the transfer must be made and the transferred assets must be held in John's name alone.

How can I make an asset transfer to my spouse?

Can I transfer assets and still remain eligible for benefits?

Yes, some transfers are "allowable transfers" and will not affect eligibility. Allowable transfers include:

• A transfer that occurred more than 36 months before a nursing home admission or application for long-term care or in-home services, whichever is earlier [note that transfers to trusts trigger a 60 month look back period].
• An asset which is transferred for fair market value.
• A transfer to a dependent, blind or disabled child [or to another person for the child's benefit].
• A transfer to the community spouse for an amount that is less than the spousal allowance [$80,760*].

In addition, the homestead (residential property of the nursing home resident or recipient of in-home services) may be transferred to one of the following persons without affecting eligibility:

• A spouse.
• A dependent, blind or disabled child.
• A sibling with an equity interest in the home who has resided in the home for at least one year prior to the date the person entered the nursing home.
• A son or daughter caretaker who has lived in the home continuously for at least two years prior to the parent's institutionalization, and who has provided care which allowed the parent to live at home and prevented an earlier nursing home admission.

Yes, such a transfer can result in a penalty period. A penalty period will result in the applicant being ineligible for benefits for the period of time the uncompensated asset would have covered the cost of care. For example, if the person made a gift of a car with a fair market value of $5,000, that person will not be eligible for the length of time that the $5,000 would have paid for his/her care. This penalty may not apply if the applicant can show the transfer was made for a reason other than to qualify for benefits or if the penalty would cause undue hardship.

What income can my spouse keep?

Your spouse may keep $2,175 (2003 figure) per month. If the spouse's income is less than this amount, then the nursing home resident or recipient of in-home services can divert part of his or her income to the spouse to bring the spouse up to the $2,175 maximum.

Will the Department of Public Aid try to recover the money it spends for nursing home care for me or my spouse?

Yes. There are two ways that Public Aid can recover money it pays for nursing home care. One way is through estate claims. The Department can file a claim against the estate of the Medicaid recipient after he or she dies. It can also file a claim against the estate of the person's spouse after the spouse's death.

 In addition, the Department can obtain a lien on real estate owned by the nursing home resident or the resident's spouse. However, the Department cannot force a sale of a home that is occupied by the nursing home resident's spouse during that spouse's lifetime.

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