The Supreme Court’s recent decision in United States v. Windsor overturning the federal Defense of Marriage Act (DOMA) will have a major impact on Medicaid eligibility for gay couples now recognized as married for federal purposes.
But not all of the changes will be beneficial to these couples! Let’s look at two very different situations.
Martha and Ruby are married and residing in a state that recognizes same-sex marriage. Ruby has to enter a nursing home. They both are living on Social Security. The couple owns a house where Martha continues to reside, a car, and personal property; all these assets are exempt and will not affect Ruby’s Medicaid eligibility. In addition, Martha has $100,000 in the bank and Ruby has $15,000. Before the Supreme Court decision, they would not be deemed married for Medicaid eligibility purposes. As a result, only Ruby’s assets would be counted, and once she spent her cash down to $2,000 she would qualify for Medicaid, which would pay her entire nursing home bill. Martha’s $100,000 would not even be considered by Medicaid.
Now if the situation were reversed, with Ruby having $100,000 in the bank and Martha only $15,000, then Ruby would be disqualified from Medicaid until she got rid of $98,000! And she can’t simply give it to Martha, because that would cause the imposition of a very long penalty period before Medicaid would be available to her, probably between 10 and 20 months (depending on the particular state).
As a result of the new Supreme Court decision, however, their cash can be transferred from one to the other with NO penalty, and since federal Medicaid law allows the at-home spouse to protect up to $115, 920, Martha can protect ALL their cash. That means that Ruby would immediately qualify for Medicaid without having to spend down her cash at all.
Note that many states allow the at-home spouse to protect only 50% of the total assets of the couple, up to a maximum of $115,920. In these states, the new decision will be beneficial if the nursing home spouse has more than 50% of the couple’s total combined assets, since then he or she can freely transfer the excess to the at-home spouse, reducing the amount of assets that have to be spent down.
So in a situation where the married couple has assets up to $116,000 or so, the Supreme Court decision is definitely beneficial to them.
But what about couples with a greater amount of assets? In this case, the new decision works against them.
Albert and Roger are married and residing in a state that recognizes same-sex marriage. Between them they have $300,000 in total cash, stocks, and CDs. Roger needs nursing home care. Prior to the new decision, only Roger’s separate assets would be considered. Thus, if Roger’s total assets were $50,000 and Albert’s were $250,000, then Roger would have to spend down from $50,000 to $2,000, but Albert’s assets would not even be considered.
Now, however, the couple’s assets must be combined, and the at-home spouse can only protect up to $115,920. That means that Albert can not keep his own $250,000 but is legally required to spend down everything over $115,920, i.e., $134,080. Thus, Roger is deemed to have not just $48,000 too much money, but $48,000 + $134,080, i.e., $182,080 too much!
You can see why some couples in the past have even considered divorce, as a way of protecting the assets of the much-wealthier at-home spouse.
Note that there are still many unresolved issues relating to the above situations. For example, what if the gay couple moves from State A, where they were legally married, to State B, which does not recognize same-sex marriages, and where one of the couple now wishes to apply for Medicaid? Will Medicaid, a joint state-and-federal program, deem them married for Medicaid eligibility purposes? Right now, no one is sure, so stay tuned for further updates!