Before You Say I Do

For many couples, it seems quite natural that sooner or later they will want to legally cement their relationship by getting married.  Whether or not that couple attaches a particular religious or cultural significance to the act of getting married, it is a fact that our society recognizes a marriage as a de facto unification of two individuals into one.  Accordingly, in many different contexts, our legal system treats married couples differently than two single individuals.  Sometimes, a married couple will enjoy certain benefits they would not otherwise have received when they were unmarried.  For example, a couple will often receive better federal income tax treatment once they file jointly as a married couple.  However, if the soon-to-be-married couple is older and/or one or both is in poor health, there are some very important issues they must consider from a financial standpoint before they decide to go ahead and tie the knot.

Under the Medicaid laws as administered in the State of Connecticut, a single applicant seeking to become eligible for Medicaid benefits can have no more than $1,600 in countable assets in their own name.  That rule is very clear and straightforward and will often result in the need for that benefit applicant to “spend down” whatever amount of assets they have above that allowable maximum. 

In contrast, when a married applicant files for Medicaid, they are subject to a different rule.  While the institutionalized member of the married couple can still keep just the $1,600, the non-institutionalized “community spouse,” living outside of the nursing home, is allowed to retain quite a bit more in assets than just $1,600.  The community spouse is allowed to retain an allowance amount that changes each year.  For 2015, that maximum community spouse protected amount is $119,220.  So a couple consisting of one community spouse and one institutionalized spouse who files for Medicaid will together be allowed to keep a maximum of $1,600 + $119,200 between them.  If the sum of their countable assets exceeds that total, they will need to spend down their assets until their total comes down to that permitted maximum.

At first glance, it would appear that the Medicaid rules are less restrictive for a married couple than they are for a single individual Medicaid applicant.  Yet from another perspective, the rules as applied are much more restrictive than if that couple never got married in the first place.  That is to say, if a longtime older couple simply chooses not to get married and one becomes ill and requires Medicaid, then that Medicaid applicant would need to spend down their assets to the $1,600 level.  But the other member of the couple, still legally separate since the two are not married, would not need to spend down any of their assets before the institutionalized person can start receiving benefits.  Of course as a loving and committed couple, the non-institutionalized member of the couple would still have the ability to pay the care expenses for the institutionalized person.  But they would not be legally obligated to do so, which is a crucial distinction.

The point of our article is not to say that marriage is to be avoided in general.  Rather, it is important to stay mindful of the Medicaid eligibility rules when considering whether or not to get married from an estate planning point of view.

Please call us at 860-769-6938 if you have any questions about the issues presented above or if you care to discuss any other planning issues with us.

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