01 Dec Government Helps Pay Nursing Home Cost with 2015 Protected Resource Amount Increase
Although not officially released, projections for the 2015 Protected Resource Amount (“PRA”) dollar figures can now be estimated in light of the consumer price index update recently made. These figures are used to determine how much can be protected when one spouse is in a nursing home and applies for Medicaid and the other spouse lives in the community.
As many of you know, when one spouse applies for nursing home Medicaid (the “institutionalized spouse”) and one spouse stays at home or in the community (the “community spouse”), the Texas Health and Human Services Commission (HHSC) takes a snapshot of the couple’s countable resources (some examples of non-countable resources are pre-need funeral arrangements with waiver, homestead, one car, etc.) as of the first day of the month in which the institutionalized spouse receives at least 30 days of continuous skilled care. HHSC looks at the first day of that month as the date to determine the PRA for the community spouse (the amount of countable resources that can be kept by the community spouse if there is no expansion as explained below).
Texas will increase the Protected Resource Amount from $117,240 to $119,220 as of January 1, 2015. However, as explained in previous issues of the Texas Elder Law E-letter, the community spouse can often expand the PRA if the non-countable resource income of the couple (Texas is an “income first” state as of September 1, 2004) is less than the minimum monthly maintenance needs allowance (MMMNA) which is presently $2,931 and is scheduled to rise to $2,980.50 as of January 1, 2015. Thus, the non-countable resource income of both spouses must be below the MMMNA (presently $2,931) for there to be a possibility of expansion. On January 1, 2015, the minimum protected resource amount will also rise from $23,448 to $23,844. These are numbers that most elder care attorneys follow very closely.
To determine the PRA, calculate the couple’s countable resources and divide that number by two. The result is the PRA unless it is above the maximum PRA ($119,220 as of January 1, 2015) or below the minimum PRA ($24,844 as of January 1, 2015). Thus, HHSC would allow the community spouse 1/2 of the couple’s countable resources as of the snapshot date unless it is above the maximum PRA or below the minimum PRA.
For example, if the couple has $30,000 of countable resources, then since $30,000/2 = $15,000 is less than the minimum PRA, the PRA that could be kept by the community spouse would be $24,844 in addition to the $2,000 that could be kept by the institutionalized spouse for a total of $26,844. The remaining $3,156 would have to be “spent down” by paying debts, buying non-countable resources, or making limited gifts (proper planning is needed for this since this creates Medicaid ineligibility as a result of the Deficit Reduction Act of 2005 as mentioned in many prior issues of the Texas Elder Law E-letter) unless the PRA is expanded (in which case all countable resources might be able to be kept by the community spouse without any change to such resources) – which is permitted due to spousal prevention from impoverishment laws.
Similarly, if a couple has $500,000 of countable resources, then since $500,000/2= $250,000 which is greater than the maximum PRA of $119,220, then the PRA would be $119,220 and $378,780 ($500,000 – $119,220 – $2,000) would need to be “spent down” prior to Medicaid eligibility – unless the PRA is expanded.
The PRA can often be expanded in Texas if the non-investment or non-countable resource income of the couple is less than the MMMNA (anticipated to be $2,980.50 in 2015). Expansion is based upon a formula which is interest rate sensitive. Thus, the lower the interest rate and the lower the non-countable resource income of the couple is below the MMMNA, then the more the PRA could be expanded – without the necessity of any “spend down” as a result of spousal prevention from impoverishment laws. With interest rates near all time lows, often more can be protected than ever before at the present time.
For help with Medicaid planning call our Dallas, Texas office at 214-720-0102