By Kim Boyer
Elder Law News
May 2006 (updated)
Margaret and Sam have been married for 41 years. Sam suffers a paralyzing stroke. Margaret is distraught. "The doctor says Sam needs long-term care in a nursing home," Margaret says. "The case worker said our income is too high to qualify for Medicaid, and we have to apply through the county after I spend down all the assets. I don't want to lose all our hard-earned money. I don't know what to do."
Nevada is an income cap state. This means that if the nursing-home spouse's income is over the income cap, he or she is not eligible for Medicaid. The income cap amount is $1,809 (2006 amount), and gross figures are used. Medicaid will also add together both spouses income, and if that amount is not more than $3,618, the nursing-home spouse is not over the income cap.
The couple has $80,000 in savings. Margaret's income from social security is $900 per month. Sam's income from social security is $700 per month, and he receives a retirement of $1,900 per month. The income is over the income cap. If Margaret applies for benefits through the County, she will need to spend down the savings to $20,000. But there is a better option.
If she proceeds properly, she may be entitled to keep their entire life savings, and Medicaid will pay for the nursing home. The at-home spouse can petition the court to create an income reduction trust. This trust is also known as a "Miller Trust." If this is done, the nursing-home spouse's income is paid out of the trust at a rate that would qualify him or her for Medicaid. The at-home spouse can then petition to increase the assets and income.
The challenge is that this result cannot be accomplished at the case worker level. It can only be done by petitioning the court. By retaining an experienced elder law attorney, Margaret can keep the entire $80,000 in savings, and keep a total of $2,488.50 per month in income. This is an example of where knowledge of the rules, and how to apply them, can be used to resolve Margaret's dilemma.
