If my spouse goes to the nursing home, will I have to spend all of our money?
No. Wisconsin has Medicaid rules that are designed to ensure that the at-home spouse's finances are not completely devastated by nursing home costs. These rules are commonly referred to as the Spousal Impoverishment Rules. Typically, the spouse at home is allowed to retain one-half of the cash assets that the couple had on the day the other spouse went into the nursing home. There are however minimum and maximums to consider. The maximum amount Wisconsin will allow the community spouse to retain is in the neighborhood of $110,000, and the minimum amount is $50,000. These amounts will typically be adjusted on a yearly basis to take into account inflation.
As an example, a married couple with $150,000 in cash assets on the day one spouse becomes institutionalized will have to spend down to $75,000 before the spouse in the nursing home can gain Medicaid eligibility. A couple with over $220,000 would have to spend down to $110,000, and a couple with less than $100,000 would get to keep $50,000.
This of course begs the question: how do I spend down? To get to the spend-down target, there is really only one rule: the community spouse must get value in return for the money spent. If the assets are given away, the state will view that transfer as a "divestment," and such uncompensated transfers will be penalized. The "spend-down" process is where the creativeness, resourcefulness, and knowledge of your planning team will truly pay dividends. Spending down without incurring excessive periods of ineligibility while, at the same time, ensuring the assets are being used effectively and protected is the most important goal in planning. Once again, this is where a team of advisors is critical to success.