05 Jan 2018 Protected Resource Amount Increase – Government Helps Pay Nursing Home Cost
The 2018 Protected Resource Amount (“PRA”) dollar figures were recently released which are used to determine how much can be protected when one spouse is in a nursing home and applies for Medicaid (which may pay all or a part of long-term care costs) and the other spouse lives in the community.
As many of you know, when one spouse applies for nursing home Medicaid (the “institutionalized spouse”) and one spouse stays at home or in the community (the “community spouse”), the Texas Health and Human Services Commission (HHSC) takes a snapshot of the couple’s countable resources (some examples of non-countable resources are pre-need funeral arrangements with a waiver or irrevocable assignment, homestead with an equity limit of $572,000 if single, one car, etc.) as of the first day of the month in which the institutionalized spouse receives at least 30 days of continuous skilled care. HHSC looks at the first day of that month as the date to determine the PRA for the community spouse (the amount of countable resources that can be kept by the community spouse if there is no expansion as explained below).
Texas will increase the Protected Resource Amount from $120,900 to $123,600 as of January 1, 2018. However, as explained in previous issues of the Texas Elder Law E-letter, the community spouse can often expand the PRA if the non-countable resource income of the couple is less than the minimum monthly maintenance needs allowance (MMMNA) which is presently $3,022.50 and is scheduled to rise to $3,090 as of January 1, 2018. Thus, the non-countable resource income (typically Social Security or a pension) of both spouses must be below the MMMNA (presently $3,022.50) for there to be a possibility of expansion. Thus, if the non-countable resource income of the couple is below the MMMNA, often the couple might have hundreds of thousands of dollars and still be eligible for Medicaid (notwithstanding the $123,600 “maximum” limit). On January 1, 2018, the minimum protected resource amount will also rise from $24,180 to $24,720. These are numbers that most elder care attorneys follow very closely.
To determine the PRA, calculate the couple’s countable resources and divide that number by two. The result is the PRA – unless it is above the maximum PRA ($123,600 as of January 1, 2018) or below the minimum PRA ($24,720 as of January 1, 2018). Thus, HHSC would allow the community spouse 1/2 of the couple’s countable resources as of the snapshot date unless it is above the maximum PRA or below the minimum PRA.
For example, if the couple has $30,000 of countable resources and non-countable resource income is less than $3,090, then since $30,000/2 = $15,000 is less than the minimum PRA, the PRA that could be kept by the community spouse would be $24,720 in addition to the $2,000 that could be kept by the institutionalized spouse for a total of $26,720. The remaining $3,280 would have to be “spent down” by paying debts, buying non-countable resources or making exempt transfers unless the PRA is expanded (in which case all countable resources might be able to be kept by the community spouse without any change to such resources) – which is permitted due to spousal prevention from impoverishment laws.
Similarly, if a couple has $500,000 of countable resources and non-countable resource income of greater than $3,090 per month, then since $500,000/2= $250,000 which is greater than the maximum PRA of $123,600, the PRA would be $123,600 and $374,400 ($500,000 – $123,600 – $2,000) would need to be “spent down” prior to Medicaid eligibility (buying exempt resources, payment of bills, make certain exempt transfers, etc.).
The PRA can often be expanded in Texas if the non-investment or non-countable resource income of the couple is less than the MMMNA (anticipated to be $3,090 in 2018). Expansion is based upon a formula which is interest rate sensitive. Thus, the lower the interest rate and the lower the non-countable resource income of the couple is below the MMMNA, then the more the PRA could be expanded – without the necessity of any “spend down” as a result of spousal prevention from impoverishment laws. Thus, in the example above, in certain cases a couple might have $500,000 or more and the institutionalized spouse could still achieve Medicaid eligibility. Since interest rates are very low, often more can be protected than ever before at the present time.