Friday, June 6, 2014
Is Community Spouse's IRA Countable in Determining Medicaid Eligibility? Arkansas Supreme Court Says "Yes"
In Arkansas Department of Human Services v. Pierce, the Arkansas Supreme Court ruled on May 29 that individual retirement accounts owned by a wife were "countable" in determining her husband's eligibility for Medicaid as a resident in a nursing home in Arkansas. In so ruling, and treating the issue as a matter of first impression in Arkansas, the Court rejected the analysis of a Wisconsin court, and aligned itself with the analysis of a New Jersey Court in determining that the state's decision -- to include IRAs owned by either spouse in the "snapshot" of resources subject to spend-down -- did not violate federal law.
In this case, the community spouse may be significantly affected, depending on her own lifespan. Hoping that her husband of 46 years would improve and not need to stay in a nursing home, it appears she had already paid "privately" for nursing home care for 18 months. With the ruling, if her husband continues to need nursing care, she will be allowed to keep $109,560, and thereby will likely spend much of her IRA savings (totaling about $350,000) towards his care.
This fact pattern arguably explains one of the reasons why Elder Law professionals have turned to Medicaid-qualified annuities and other permitted planning tools, to convert countable "resources" into uncountable "income," thereby better assisting the community spouse in financing his or her own final years, particularly if the community spouse hopes to stay at home as long as possible. Will community spouses get timely, qualified assistance with such planning?