17 Aug What happens to our savings if we need a nursing home?

Q. My wife and I have a joint checking account and a couple of joint savings accounts. We are both in our 80s. We own our home. Neither of us have a pension. We both get Social Security which comes to $800 per month for my wife, and about $400 comes out for her Medicare and supplement plan. I get $2,000 per month, which pays the bills and other living expenses. We also have three other joint investment funds. What happens to our savings if one of us has to be put in a nursing home? We both have health insurance.
— Concerned

A. We’re glad you’re thinking ahead about long-term care.

As you know, it can be very costly.

First, it’s important to note that medical insurance, including Medicare, does not cover long-term care related expenses such as nursing care, said Alex Vaccarella, a certified financial planner with Wealth Enhancement Group in Warren.

Instead, those expenses could be covered by a long-term care insurance policy, he said.

“Assuming there is no long-term care insurance in place or if that coverage has been exhausted, the spouse who needs care would be required to use their assets to cover nursing care until they qualify for Medicaid coverage, which would pick up the bill going forward,” Vaccarella said.

Ordinarily, Medicaid does not cover someone until they have spent down their assets almost entirely, but it’s important to note there are spousal protections in place that would allow one spouse to qualify for coverage without both spouses spending down all of their assets or committing all of their income to pay for care, he said.

“The concept of spousal protections applies everywhere, but Medicaid law is determined by the states and so the state in which you reside will determine how the spousal protections are determined and applied,” he said.

New Jersey Medicaid generally allows the spouse not in nursing care to keep approximately $137,000 of what are called countable assets, not including the primary residence up to $500,000, personal property and a vehicle, he said. It also allows for $3,200 or more per month in income, which applies to all income sources, he said.

“With that being said, it is likely that if one of you needs to be put in a nursing home, you would collectively need to cover the nursing home expense only until your total countable assets — excluding home, property and auto — was spend down to approximately $137,000, and would likely not need to spend any of your Social Security income on nursing care as the total is below the $3200 per month allowance,” Vaccarella said.

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This story was originally published on Aug. 17, 2022.

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