Medicaid: Spousal Impoverishment Protection

There are special rules for counting assets and dividing them between spouses.

When you or your spouse first enter a medical care facility and apply for Medicaid or ask to participate in a community-based waiver program, your agency will assess your total combined assets. You can ask for this assessment before you apply for Medicaid.

The amount of assets you and your spouse can keep is based on the value of your total combined assets as of one of the following, whichever is earlier:

• The day you entered the medical care facility for a continuous period of 30 days or more
• The day you were first determined functionally eligible for community-based waiver program.

Only your countable assets are considered.

If your total combined assets are $100,000 or less, the community spouse can keep $50,000 and the institutionalized spouse can keep $2,000. If they are more than $100,000, you should contact your local county or tribal agency to help you determine the amount of assets you can each keep.

Once the couple’s assets are at or below their asset limit, they have one year to make sure the institutionalized spouse has no more than $2,000 worth of assets in their name. During this time, the institutionalized spouse usually transfers all but $2,000 of their assets to the community spouse.

Example: Bob is in a nursing home and his spouse, Toni, lives in their house. They have $65,000 in a money market account and have $10,000 in a checking account. The accounts are in both their names. To reduce their assets to the allowable limit ($52,000), they spend $1,500 on an adjustable bed for Bob and $22,000 on a new car for Toni after trading in their old one.

Once Bob is enrolled in Medicaid, they open a new checking account for Bob and take his name off both the money market account and the couple’s checking account. Bob’s new account has $1,000 and Toni’s accounts have the remaining $50,500.

After the one-year asset transfer period is over, Bob’s account balance must remain under $2,000 for him to continue to qualify for Medicaid.

Examples of countable assets may include, but are not limited to:

• Cash.
• Checking accounts.
• Life insurance policies.
• Savings accounts.
• Certificates of deposit.
• Real estate.
• Investments.
• Stocks and bonds.

Medicaid does not count some assets. These include:

• Your home (if the community spouse or other dependent relative lives there).
• One car.
• Burial assets (such as insurance, some amounts in irrevocable burial trusts, and plots).
• Household furnishings.
• Clothes and other personal items.

“Excess” assets (assets that are above the asset limit) can be reduced to allowable limits if they’re used to pay for nursing home or in-home care costs—or for things like:

• Home repairs or improvements.
• Car repairs or replacement.
• Clothes.
• Other household expenses.

If excess assets aren’t reduced, the institutionalized spouse can’t enroll in Medicaid.

Divestment is when you or your spouse:

• Give away income or assets for less than fair market value.
• Avoid taking income or assets you are entitled to, such as a retirement income or an inheritance.
• Buy certain types of assets, such as:
  • Annuities.
  • Life estates.
  • Loans.

If you reduce your assets to the limit by divesting them, you may have a penalty period before Medicaid will provide long-term care services.

See the Wisconsin Medicaid Divestment fact sheet, P-10058, for more information.

There are special rules for counting income and the amount of income that one spouse can transfer to another. When determining Medicaid enrollment, only the income of the institutionalized spouse is counted. The community spouse can’t be required to pay for their spouse’s care unless a court orders it.

An institutionalized spouse who qualifies for Medicaid may be allowed to protect some of their income by transferring it to their spouse. That depends on the amount of income the community spouse has. The institutionalized spouse can also transfer income to other dependent family members (children under age 18 or siblings, parents, or children of any age who are claimed as tax dependents). For help determining how much you can transfer, contact your local county or tribal agency.

A spouse in a Medicaid long-term care program must meet the same income and asset tests as a single person applying for Medicaid in a nursing home or community-based waiver program. The assets available to the spouse in the Medicaid long-term care program are limited to $2,000.

Except for a small personal needs allowance, the spouse in Medicaid long-term care services must either transfer their income to the community spouse or use it to pay for their nursing or home care.

If both you and your spouse are in a Medicaid long-term care program and your spouse lives in a nursing home, the single individual income and asset limits apply to you.