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     For an individual entering a nursing home, the general rule is very simple. Just about everything you have (your income and your assets) must go to the nursing home to pay expenses. Only when your assets run out will Medical Assistance step in. As stated above, the practical application of this rule is a formula for financial ruin for older Americans and their families.

To qualify for Medical Assistance, a person entering a nursing home must:

     When a person meets these criteria, Medical Assistance generally will cover long-term nursing home care. The first requirements are pretty straightforward. To obtain Medical Assistance, a person must be sixty-five, blind, or disabled. Most people would not consider a nursing home until their disability was so great that they had no other option. Residency generally poses no problem either. A person is considered a resident in a state in which he or she intends to stay indefinitely. States cannot establish residency waiting periods. A person can move from one state to another, move right into a nursing home, and immediately obtain Medical Assistance benefits.

     In the third condition above, the "type of care" requirement should not pose a problem. People generally don't go into nursing homes by choice. They enter because they need the care and have no other choice.

     For purposes of the Medical Assistance eligibility rules, "income" is defined broadly. Both earned income (cash or in-kind payments for work) and unearned income generally are included. Social Security, pensions, IRA'S, worker's compensation, unemployment, alimony, rents, interest, dividends, annuities, gifts, and even regular contributions of food and shelter are all considered unearned income.

Assets Limitation Test

     Before 1988 there was no protection for the community spouse. All assets of both spouses has to be used to pay for nursing home care of the institutional spouse. However, since 1988 the community spouse may keep one-half of the total couple's assets with a minimum of $16,824 and a maximum value of $84,120.00 (2000). Assets include the institutional spouse's IRA and pension, but do not include the community's spouses IRA or pension.

    However, if the monthly income of the community (at home) spouse, falls below a federally mandated floor called a monthly minimum maintenance needs allowance (MMNA), which is $1,684.00 in Pennsylvania in 2000, then the community spouse can keep more of those assets (up to $84,120.00) of the institutionalized souse that otherwise have to be spent down.

     Generally, the idea is to allow these extra assets to be retained so they could generate income which, when combined with the community spouse's monthly income, would bring the community spouse up to the MMNA.  It is important, however, to "lock in" this amount by completing the Department of Public Welfare Resource Assessment form as soon as we have completed our asset protection plan.

     If the assets grow during spend down period, the institutional spouse is not eligible for Medical Assistance until the assets are spent down to the protected amount. However, after the institutional spouse becomes eligible, the community spouse can increase or decrease the protected amount without affecting the eligibility of the institutional spouse. But, this will affect the future Medical Assistance eligibility of the community spouse.

     I don't want to overstate the case. In Pennsylvania, an older person on Medical Assistance will be allowed to keep some of his or her assets, up to a maximum total value of about $2,400 (plus certain exempt assets). What a comfort to know that for a lifetime of hard work and "doing without", the institutionalized spouse will get to keep a grand sum of about $2,400.

     In addition to the above $2,400, a few specific items, defined as "exempt assets," are excluded from the maximum asset allotments. These exempt assets are items you can keep "off the top", meaning that they are Medical Assistance neutral and won't be counted against you when Uncle Sam is taking stock of your assets to determine whether you pass or fail his asset limitation test.  In Pennsylvania, these exempt assets include the following:

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