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Married Couples: Cost of Long Term Care Might Be a Catastrophic FINANCIAL Risk

| May 05, 2021

Not meant to be a definitive guide. An introduction to complex concepts and informational resources. At the time of need get the updated facts for your state and your specific situation ...

Our Public Policy Mess: ... "medical bills bankrupt more Americans than any other type of expense."

"Michael Stein M.D. recently wrote a book appropriately titled Broke. Detailing his experiences working with impoverished clients within his medical practice. ... Dr. Stein occupies a unique position. Through no fault of his own, medical bills bankrupt more Americans than any other type of expense."


Bruce's Executive Summary

Long-Term Care is complicated, potentially ever-changing and especially with Medicaid, rules vary by state so states can change their rules, potentially with large financial impact, especially for Married Couples.  Married Couples with little or no IRAs could and probably will face Medicaid eligibility requirements for limits on income and assets. Maximum eligibility requirements to receive Medicaid payments can be very low, e.g. $2,000 of assets for a single but (maybe) $130,380 CSRA - "Community Spouse Resource Allowance for the spouse of an incapacitated applicant.

KEY POINT: State-by-state rules sometimes exempt IRAs and 401(k)'s for Medicaid Applicant and / or Spouse.

Such an exemption could be a meaningful lifeline. Until or unless states offer simplicity and uniformity -- a far cry from the current facts - this IRA / 401(k) exemption might literally be meaningful enough to move to a more liberal state. (Yikes!)

This post has facts about the problem.

Please see other posts for

  1. Risk reduction / mitigation choices currently in use
  2. Non-insurance as well as insurance
  3. Eligibility
  4. Advantages & Disadvantages of possible choices

Definitions in wide use (and problems with them)

The "6 Activities of Daily Living" ("ADLs")

  1. Bathing
  2. Continence (maintaining(
  3. Dressing
  4. Eating
  5. Transferring (e.g. Bed to Chair, Chair to Bed)
  6. Bowel Movement ("Toileting")

These 6 ADLs are in wide use in the insurance industry. Since the time these were standardized, a person is considered incapacitated if they are unable to perform at least "2 of 6" ADL's - Activities of Daily Living - without the help of another person. Cognitive Impairment (Potential harm to self or others. Requires supervision.) by itself can also qualify for incapacity.

Some examples of things missing from the above list?

  1. Reading
  2. Speaking
  3. Hearing
  4. Walking
  5. Driving
  6. Grocery shopping
  7. Cooking
  8. Paying bills / managing home finances
  9. Home maintenance & repair. Not necessarily doing it but being able to arrange for necessary tasks to be performed by others.

And I'm sure readers can think of other things.

Marriage can provide a discount for Long-Term Care Insurance - and vital help for someone not meeting incapacity "definition."

"In Real Life" (IRL) Long Term Care insurers offer a discount for married, even if only one is applying for LTCi - Long Term Care insurance. Logically, it is pretty easy to see why. If one spouse is capable of doing the 9 things mentioned above, as long as the other spouse can physically perform all 6 of the ADLs, their is not a medical qualification of meeting the incapacity definition to potentially receive payments from any Long Term Care insurance they might have, or, typically, care provided by Medicaid whether at home or in a facility. Also to no one's surprise, the great majority of care is received informally in the home.

Biggest Misconception: "We've Got This!" (Medicare / Our health insurance (NOT LTC insurance) will pay for Long-Term Care)

Medicare pays for medically necessary care.  “Medicare does not pay for most long-term care services or personal care— such as help with bathing or for supervision (often referred to as custodial care).”

Source: --


Fact: Medicaid DOES pay for Long-Term Care. When you meet eligibility requirements

Some useful quotes from ...

"Medicaid is a joint federal and state government program that helps people with low income and assets pay for some or all of their health care bills. It covers medical care, like doctor visits and hospital costs, long-term care services in nursing homes, and long-term care services provided at home, such as visiting nurses and assistance with personal care. Unlike Medicare, Medicaid does pay for custodial care in nursing homes and at home."

"Overall program rules for who can be eligible for Medicaid and what services are covered are based on federal requirements, but states have considerable leeway in how they operate their programs. States are required to cover certain groups of individuals, but have the option to cover additional groups. Similarly, states are required to cover certain services, but have the option of covering additional services if they wish to do so. As a result, eligibility rules and services that are covered vary from state to state.

To be eligible for Medicaid you must meet certain requirements, including having income and assets that do not exceed the levels used by your state. 


Qualifying Financially for Medicaid: Bruce's Executive Summary

Medicaid will pay if you meet financial eligibility. Very low assets. Pretty low income. See quote below. These numbers vary by state and states have a lot of leeway to change their rules, so get the current facts if / when this applies to you.

Single: $2,000 in assets.

Couple: Federal Maximum of $130,380. of assets. States can set lower amount.

Then, the most uncomfortable concept: "Spousal Impoverishment Rules"

Spousal Impoverishment Rules from

"As we mentioned in the section on assets the asset limit in most states is about $2,000 for an individual, and $3,000 for a couple when both spouses are living together.

But, if one spouse is in an institution such as a nursing home and the other spouse is still living on the community, different rules apply. These rules are commonly known as the spousal impoverishment rules.

Under the spousal impoverishment rules, though, the community spouse is allowed to keep a portion of the couple's assets. That portion is usually one-half of the couple's combined assets, up to a maximum of $115,920 in 2013. In about half of the states, if the couple has less than that in total assets the community spouse can keep all of the couple's assets.

In addition to assets, the spousal impoverishment rules provide that at least some of the institutionalized spouse's income can be protected for the community spouse to use. This helps ensure that the community spouse will have income to pay for living expenses. In 2013, the maximum amount of the institutionalized spouse's income that can be protected for the community spouse is $2,898 a month. However, in deciding how much income to protect, the state will take into consideration any other income the community spouse has."

Source: --

Case Studies about Married Couples:

High Earner e.g. $1,000,000+ IRA and / or $100,000+ pension becomes incapacitated

See footnote: "If I divorce my husband, will he be eligible for Medicaid?"

Bruce's short answer: Leaving aside the potential wrenching emotional changes, the short answer is: "Probably not an Easy  or Simple Fix." The financially conservative way to think about this issue ... As a married couple, governmental entities (State has a say in Medicaid) will look at this from their point of view not yours. The healthy spouse might have earned the great majority of the couple's assets. But if those assets are significant, at minimum they are going to have to be disclosed. And governments are under financial pressure to only provide their own money for LTC (i.e. Medicaid) for the people who really have no other choice. Better to be prepared.

IF the High Earner becomes incapacitated AND the assets are in an IRA / 401(k)  - probably better if already being periodically withdrawn such as RMDs, Medicaid might "only" require that income to be counted and not require IRA etc. to be liquidated.

If the spouse of the High Earner becomes incapacitated, state-by-state rules might be a bit more favorable. Simply unclear and potentially varies by state how much of the High Earner's income and / or assets Medicaid will require to pay for the incapacitated spouse.

Married Couple both drawing Social Security - home w mortgage - little else

Best estimate at this point. The incapacitated spouse's Social Security would have to be used to pay for Long Term Care. Leaving the trailing "healthy" spouse in the home and having to pay mortgage and living expenses out of their own social security check only. 

Rare but Financially Conservative: Married Couple both have retirement income. Only living on the smaller income and saving the rest

So the larger income could be directed toward the cost of care and the trailing healthy spouse could live on the smaller income. Realistically, not many retired married couples are in this situation.

From Humble Dollar, How Much INCOME will Medicaid Take?

"You need to be all but broke to get Medicaid assistance, at least in Maryland. My mom was receiving a small railroad pension, which covered about 85% of her living expenses prior to her accident. The rest hinged on kids and grandkids, who had for many years kept her afloat with careful attention to her needs and expenses. But that pension—and even her small life insurance policy with a tiny cash value—became a target when we applied for Medicaid benefits."

Source: Humble Dollar Taking Caring for Mom" --



  1. From - what Medicare covers --
  2. From - some facts about Medicaid --
  3. Medicaid asset income eligibility details from ...
  4. From American Council on Aging CSRA - "Community Spouse Resource Allowance" -
  5. The Government and Long Term Care ... Result ...
  6. AgingCare: "If I divorce my husband, will he be eligible for Medicaid? --
  7. Long Term - Costs of Care -- -  Detailed description of what Medicare does and does not cover
  8. "Caring for Mom" in Humble Dollar ...
  9. From by the American Council on Aging -- 


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