Legal Blog

The Weekly Scenario from Steve Shane – 10.21.13

Question:  My uncle is entering into a nursing home and my aunt needs an additional source of income for her maintenance and support.  We are applying for medical assistance (i.e., Medicaid) for my uncle since they cannot afford the monthly payments.  I’m concerned that my aunt does not have sufficient assets to sustain her for the intermediate to long term.  Can an annuity provide an additional source of income to my aunt? Answer:  When one spouse qualifies for Medicaid to pay for a nursing home stay, the spouse who is the stay at home or “community spouse,” may have little in the way of resources to provide for such spouse’s support.  That is because in order for a spouse to qualify for Medicaid, the spouse applying for Medicaid cannot have much more than about $2,000. In addition, generally, the community spouse may not retain more than ½ of the couple’s total countable assets up to a little over $115,000.  This tends to be problematic because the retained assets may not be enough to provide any sort of financial security for the community spouse and as a couple, they do not have enough funds to cover a nursing home stay. One possibility to generate an income stream for the community spouse is to have the community spouse purchase an annuity, in essence, converting an asset that would otherwise be counted in determining eligibility for Medicaid, into an income stream that would not be countable.  The annuity would need to meet certain requirements in order to not be considered an asset transfer (and render your uncle eligible to receive Medicaid) –generally speaking, the annuity must be irrevocable and name the state as a remainder beneficiary. Comment:  The annuity option is one potential tool but needs to be very carefully implemented.  It is important for the family to speak with an elder law attorney/advisor to learn about the options available. Steven E. Shane Principal Offit│Kurman Attorneys At Law 301.575.0313 Washington 443.738.1513 Baltimore 410.218.9339 Mobile 301.575.0335 Facsimile Please note the above material discussed is intended to provide only general information. Do not, under any circumstances, solely rely on this information as legal advice. Legal matters are often complicated. For assistance with your specific legal problem or inquiry please contact me directly.