My Spouse Has To Go Into A Nursing Home
How to figure Minimum Monthly Maintenance Income Allowance for Purposes of Nursing Home Medicaid Qualification
Mr. and Mrs. Smith lived in a house just down the street. They were by no means rich but they did have some money in the bank. With their combined income, they lived comfortably. Like most people, over the last ten years with the market going up and down, they lost part of their savings and the interest that was a cushion for their income has dwindled. They are still able to pay the mortgage and the rest of their bills. Mr. Smith makes the lion share of the income; his social security and pension bring home about $1,900 per month. Mrs. Smith was a house wife and a stay at home mom. She receives $450 in monthly social security income. A few weeks ago, Mr. Smith needed to go into the hospital from complications of pneumonia. Instead of getting better, his health worsened. Other complications from lying in bed for several weeks caused him to deteriorate further. Instead of coming home, he needed to be placed in nursing home care. When one spouse needs to enter a nursing home and the other spouse relies on their income, what do they do? In the Smith’s case, there was no way that Mrs. Smith could pay the bills. She relied on Mr. Smith’s pension and social security income. Additionally, she was just informed that the daily room rate was $245. That is $7,350 per month and almost $90,000 per year! Mrs. Smith started to panic. What would she do? That much money would wipe them out in just a year or maybe a little longer and she would be totally broke! She would lose her home and everything they had worked for all of their lives!
This “story” is actually a true to life every-day occurrence. No one wants to go into a nursing home. Unfortunately, all the nursing homes in town are full of people who don’t want to be there. It is never a convenient time and it is almost never planned. What can Mrs. Smith do, what are her options and what can be done to help her?
Mrs. Smith came to Elder Planning Alliance for a free consultation. They determined that Mr. and Mrs. Smith are definite candidates for the ICP nursing home Medicaid program. Are they in a qualified state? In a word, no, but can they be with help? Yes. In this article we will analyze in detail what Mrs. Smith can keep. We will also address Mr. Smiths’ patient responsibility that must be paid to the nursing home.
Let’s take a closer look at the Smith’s situation; their total combined assets are around $100,000 in countable assets. Mr. Smith is allowed to have in countable assets a maximum of $2,000 for purposes of nursing home Medicaid qualification. Mrs. Smith, as the community spouse, is allowed to have up to $113,640. In their case, they have less than $115,640 so they would have to reposition the cash assets so Mr. Smith is under the $2,000 figure to be considered in a nursing home Medicaid qualified state. The income is going to be the primary factor to Mrs. Smith being able to financially make it and cover her bills. How is this done? It’s done through the Minimum Monthly Maintenance Income allowance or MMMIA.
The MMMIA is part of nursing home Medicaid Policy that originates from the Spousal Impoverishment Act of 1988. The figures I provide in this article are based on the 2012 figures for the state of Florida. These figures may be different from state to state but the way it is figured is going to be very similar. When figuring MMMIA the minimum amount a community spouse is entitled to keep is $1,839 in gross monthly income. The maximum amount of MMMIA is $2,841. When determining how much a community spouse can keep we must look at their “basic housing expenses.” Unfortunately, nursing home Medicaid and the Department of Children and Families does not take all of the bills into account. For purposes of nursing home Medicaid eligibility it’s only what are deemed as basic housing expenses. Your car payment and car insurance are not considered basic housing expenses. Neither is your yard maintenance service, pool cleaning service, cable TV or groceries.
What are the basic housing expenses? These are broken down into two different categories; the first category we will call “utilities” and they consist of the electric bill, water, gas, garbage pickup and basic phone bill. The other category includes the mortgage or rent, property taxes on the homestead, homeowners or renters insurance, flood insurance, homeowner’s association or condo fees and property assessments.
How do we figure out what the MMMIA is going to be? First, we look at the utilities. Add up all of the utility costs, by taking a three month average for each bill. If this total is less than $317 then we can use the $317 figure allowed toward the MMMIA calculation. The next thing we do is add up the mortgage or rent, taxes, insurance home owner’s association fees and if there are any assessments. If there is a mortgage, the taxes, insurance and CDD fees are usually combined in the mortgage total, so be careful not to count them twice. Add these totals together and then subtract the “excess shelter cost” (think of this as a deductible) which is $552. If there is a positive number after subtracting the $552, add this number to the $1,839 up to a maximum of $2,841. I will use the Smith’s as an example.
Mr. Smith’s gross income is $1250.50 social security. This is $1154 take home plus the part B withholding of $96.50. The pension has no withholding and is $750. This gives Mr. Smith a grand total of $2,000.50. Mrs. Smith makes $450 plus her part B withholding of $96.50 equaling $546.50. This gives them a combined gross income of $2,547. Because Mr. Smith is under the Maximum of $2,094 in gross income he will not need a qualified income trust. Their basic housing expenses are as follows:
- Mortgage: $650 and this includes property taxes and home owner’s insurance.
- H.O. Association Fees: $150 per month
- Electric: $225
- Water: $65
- Garbage: $15
- Phone: $50
First let’s look at the utilities, they add up to $355 which is more than $317 so we will use the actual cost of $355. We will also need to supply the three most current months’ utility bills. The next thing to look at is the mortgage of $650 and the Association fees of $150 which add up to $800. We add the $800 and the $355 which equal $1,155. We then subtract the excess shelter cost of $552 which leaves $603. We add this figure to the MMMIA of $1,839 and we get $2,442. In this example Mrs. Smith would be able to keep $2,442 of the income. When you take their combined gross income of $2,547 and subtract $2,442 you get $105. Mr. Smith is able to keep a personal needs allowance of $35 per month. This needs to be subtracted from the $105 leaving him with a patient responsibility of only $70! If he had health insurance or a Medicare supplement, he would be able to pay the premium out of his income. Therefore, in this example, it is possible the Smiths’ may not have to pay anything to the nursing home. He can be in the same nursing home facility that was going to cost him over $7,400 per month! Another interesting fact in this example is that when Mr. Smith goes on Medicaid, his part B Medicare premium of $96.50 is no longer withheld from his social security income. Mrs. Smith would actually receive more take home income with Mr. Smith in the nursing home than when he was at home!
What is the end result with regards to nursing home Medicaid? Mrs. Smith was able to keep all of their assets and almost all of the income! Mr. Smith’s patient responsibility was only $70 per month. Now Mrs. Smith has the money to pay all her bills and not have anxiety about depleting their hard earned life savings or their home. Without the knowledge of what they could legally do with regards to nursing home Medicaid and proper planning they would have lost everything. However, because she came to Elder Planning Alliance, she was able to keep everything.
Elder Planning Alliance can help assist you with nursing home Medicaid. We will utilize strategic estate planning for the preservation and protection of yours or your loved ones’ assets. The nursing home Medicaid specialists at Elder Planning Alliance offer families a free initial consultation. You will be given the peace of mind of knowing that you are acting in the best interest of yourself or your loved ones. For immediate help, please do not hesitate to contact the nursing home Medicaid professionals, toll free, at 1-866-372-2702. We have helped hundreds of families just like yours with asset protection and asset preservation.