Division of Assets is the name used to the Spousal Impoverishment provisions of the Medicare Catastrophic Act of 1988. The law applies only to couples and was intended to change the eligibility requirements for Medicaid where one spouse needs nursing home care while the other spouse remains in the community. The law recognizes that both spouses should not be impoverished when only one needs to qualify for Medicaid assistance.
Because of this recognition, division of assets was born. Basically, in a division of assets, a couple gathers all their countable assets in a review. The countable assets are then divided in two, with the at-home or “community spouse” allowed to keep one half of the countable assets up to maximum of approximately $116,000. The other half of the countable assets must be spent down until less than $2,000 remains.
Each state also establishes a monthly income amount for the at-home spouse. This is called the Minimum Monthly Maintenance Needs Allowance. This permits the community spouse to keep a minimum income of about $1,900 up to a maximum of about $2,900.
If the community spouse does not have at least $1,900 in income, then he or she is allowed to keep income from the nursing home spouse up to an amount necessary to reach the Minimum Monthly Needs Allowance. The nursing home spouse’s remaining income will then be paid to the nursing home. This helps avoid the necessity for the at-home spouse to dip into their savings each month.
For example, assume the at-home spouse receives $750 per month in Social Security. Also assume that her needs are calculated to be the minimum of $1,900. With her social security, she is short $1,150 each month.
In this case, the community spouse will receive $1,150 per month from her spouse’s income and the rest of the nursing home spouse’s income will then be used to pay for the cost of his nursing home care.