Protecting the Spouse Who Stays at Home
When one spouse enters care and the other stays at home, the rules recognize that a couple's assets are not simply the sick spouse's to spend. A defined share of resources may be retained, and the spouse at home is entitled to a minimum monthly income.
The rule in short
Where one spouse enters long-term care and the other remains in the community, protections apply. Resources are assessed as of a defined point and a share may be retained by the spouse at home, subject to floors and ceilings. That spouse is also entitled to a minimum monthly income, which may be met by diverting income from the spouse in care. Both figures can be increased in defined circumstances, and both are frequently applied at the minimum by default.
The fear behind almost every conversation about care costs is not really about the person going into care. It is about the one staying behind, and whether they will have anything left to live on.
The resource protection
A snapshot is taken. Of the couple's countable resources as of a defined point, generally when a continuous period of institutional care begins.
A share may be retained. By the spouse at home, calculated from that snapshot and subject to both a minimum floor and a maximum ceiling.
The floor protects modest couples. Since a spouse whose share falls below it keeps up to the minimum rather than the calculated proportion.
The ceiling caps larger estates. Above which the excess counts and must be dealt with before eligibility begins.
And what counts is the usual question. Assessed on the same basis as elsewhere, set out in what counts as a resource.
The income protection
A minimum monthly figure applies. Below which the spouse at home should not be left, calculated under rules that vary somewhat by state.
Housing costs can raise it. Where rent, mortgage, taxes and utilities exceed a threshold, which is regularly overlooked because nobody asks.
Income can be diverted. From the spouse in care, whose income would otherwise go toward the cost of that care, to make up the shortfall.
The spouse's own income comes first. So the diversion is of the difference rather than of a fixed amount, and a spouse with a pension may need less.
And the figure can be increased. On evidence of actual need, which is where the most significant gains in these cases are usually found.
| Protection | Applies to | Can be increased |
|---|---|---|
| Retained resource share | The spouse at home | Yes, in defined circumstances |
| Minimum monthly income | The spouse at home | Yes, on evidence of need |
| Housing cost adjustment | The spouse at home | Claimed, not automatic |
| Home exclusion | The couple | Not applicable |
| Income of the spouse in care | The cost of care | Diverted where needed |
Where the gains actually are
Getting the snapshot right. Since an understated resource total at the assessment date reduces the retained share for the whole of the case.
Claiming the housing adjustment. Which requires producing the actual costs, and which frequently increases the monthly figure meaningfully.
Seeking an increased income allowance. Where the standard figure does not meet real needs, supported by a budget and by documents.
Seeking an increased resource allowance. Where the retained resources cannot generate the income the spouse is entitled to receive.
And converting rather than transferring. Since spending on the couple's own needs reduces countable resources without the penalty in gifts that create a penalty.
Both the resource allowance and the income allowance can be increased where the circumstances justify it, and both are applied at the standard level unless somebody asks. Families accept the figures they are given because nothing in the process suggests they are negotiable. A spouse with high housing costs, or with resources that cannot generate the income they are entitled to, may be entitled to considerably more, and the only way to find out is to ask with evidence.
What often goes wrong
The standard figures are accepted. Because nobody explained that they are minimums rather than entitlements, and increases have to be asked for.
The snapshot date passes unnoticed. So the assessment is made from incomplete records reconstructed months afterward.
Housing costs are never mentioned. Which quietly costs a spouse a monthly amount for the whole of the other's time in care.
Assets are transferred instead. Producing a penalty when the couple could simply have retained or converted them lawfully.
And the home is dealt with badly. Despite the protections that apply to a spouse living in it, described in the home and what happens to it.
What to do, and when
Establish the snapshot date. And document the resources as at that date, since the whole calculation runs from it.
Assemble the housing costs. Mortgage or rent, taxes, insurance and utilities, which are needed to claim the adjustment.
Prepare a budget for the spouse at home. Realistic and documented, since that is what supports a request for an increased allowance.
Take advice before spending or transferring. Because conversion is lawful and transfer is penalized, and the difference is not always obvious.
And apply promptly. Since the funding gap during a pending application falls on the couple, as covered in how care is funded when savings end.
These rules exist because the alternative was couples being separated financially as well as physically, with one spouse left in poverty by the other's illness. They work reasonably well, and they work considerably better for families who know what to ask for.
The snapshot is the foundation of everything. A resource assessment made from complete records at the right date sets the retained share for the whole of the case, and one reconstructed carelessly months later usually sets it lower.
The housing adjustment is the most commonly missed item, and it is worth real money every month. It requires nothing more than producing the actual costs, and it is not offered unless somebody raises it.
The increases available on both allowances are where the significant gains sit. They exist precisely because the standard figures do not fit every household, and they are used far less often than they should be.
The temptation to move assets is as strong here as anywhere and as ill-advised. Couples in this position generally have lawful routes — retention, conversion and the allowances — that achieve more than a transfer would, without the penalty.
And the whole of it works better with early advice, because the snapshot date, the application timing and the spending decisions all interact. A conversation before the care begins is worth several afterward.
There is a further point that couples find reassuring and rarely hear. These protections apply automatically to the couple as a couple; they do not require anybody to separate, to divorce, or to divide assets formally. Families occasionally raise divorce as a way of protecting the spouse at home, usually after somebody at a coffee morning suggested it, and it is almost never necessary and frequently counterproductive.
What is necessary is documentation and a willingness to ask. The snapshot has to be evidenced, the housing costs have to be produced, and the case for an increased allowance has to be made with figures. None of that requires anybody to change their marriage, and all of it is more effective than any of the informal arrangements families reach for instead.
For the spouse at home, the practical result of getting this right is the difference between a manageable retirement and a precarious one, over what may be many years. It is worth an afternoon with somebody who does this regularly.
Points to carry away
- A defined share of couple's resources may be retained at home.
- The spouse at home is entitled to a minimum monthly income.
- Income may be diverted from the spouse in care to meet it.
- Both allowances can be increased in defined circumstances.
- A resource assessment as of a defined point sets the baseline.
Questions readers ask
How is the retained share calculated?
From a snapshot of the couple's countable resources taken as of a defined point, generally the beginning of a continuous period of institutional care. A share of that total may be retained by the spouse at home, subject to a floor below which they keep everything up to a minimum and a ceiling above which the excess must be spent down. Because the figure depends on a snapshot at a particular date, establishing what the resources actually were on that date is a piece of documentary work worth doing carefully rather than approximately.
What is the minimum income allowance for?
It exists so that the spouse at home is not left without enough to live on while the other's income goes toward care costs. Where their own income falls below the applicable figure, income belonging to the spouse in care can be diverted to make it up. The figure takes account of housing costs above a threshold, which means a spouse with a mortgage or high rent may be entitled to more than the basic amount. That adjustment is frequently missed because nobody asks about housing costs.
Can either figure be increased?
Yes, in defined circumstances, and this is where the largest gains usually sit. Where the standard income allowance is not enough to meet the spouse's actual needs, a higher amount can be sought, and where the retained resources cannot generate the income the spouse is entitled to, an increased resource allowance may be justified. Both routes exist, both require evidence, and both are far more often available than they are used, because the standard figures are applied by default unless somebody argues otherwise.
Sources
- 42 U.S.C. § 1396r-5 — Treatment of income and resources for certain institutionalized spouseslaw.cornell.edu
- 42 U.S.C. § 1396p — Liens, adjustments and transfers of assetslaw.cornell.edu
- 42 U.S.C. § 1396a — State plans for medical assistancelaw.cornell.edu
- Legal Information Institute — Medicaidlaw.cornell.edu
- Legal Information Institute — Marital Propertylaw.cornell.edu
- Legal Information Institute — Elder Lawlaw.cornell.edu
Silverline Legal Notes is a publication, not a law firm. This article states general rules and cites its sources; it is not advice about any particular case, and the law differs by state and changes over time.
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