Lately, with a plummeting financial market and shrinking investment portfolios, a new trend has emerged. Community spouses are reluctant to qualify their institutionalized spouses for Medicaid benefits for the fact that their investment portfolios will need to be liquidated. Is that so bad? What if the market recovers? What if it does not? Is there enough time for a recovery?
In the case of a healthy community spouse, where a substantial amount of the wealth remains, the answer is "absolutely not!" In such a case, the Medicaid plan will provide an immediate benefit.
Assume for the moment that the husband has gone into the nursing home, and the couple's investment portfolio has lost 30% of its value, or $300,000.00. The wife would like to wait for the market to recover, but during the wait, she understands that the nursing home will be charging $7,500.00 per month. Instead, following my plan, the wife opts to retain $100,000.00 of countable resources ("CSRA"), and invests the $600,000.00 spend-down amount into a Medicaid Compliant Annuity ("MCA").
As a result of the plan, the wife retains the family home, automobile, household furniture and personal property, the prepaid funeral arrangements, $100,000.00 of cash, and $7,200.00 of monthly income - most of which came from the MCA. The plan allows the husband to immediately qualify for Medicaid benefits, with a monthly co-pay of $1,100.00, allowing the couple to save $6,400.00 per month.
Additionally, in order to recover the investment loss, the wife purchases a $300,000 face value life insurance policy, insuring her life. The primary beneficiary of the life insurance policy is the couple's three adult children. Further, in order to protect her assets from possible future long term care costs, the wife purchases a long term care insurance policy (LTCIP), including a return of premium rider, which includes coverage for home healthcare, assisted living, and nursing home care. As a result of the LTCIP purchase, the wife is certain that she will never have to rely on Medicaid. Finally, after deducting the life insurance and long term care insurance policy monthly costs, the wife is confident that she has sufficient monthly income to meet her needs.
This is a win, win, and win situation for everyone involved.
