The Connecticut Supreme Court handed down a favorable decision in a case argued by Attorney Carmine Perri of the Berlin-based law firm of Czepiga Daly Pope & Perri recently.
For married couples who intend to apply for Medicaid for one of the spouses, it is now possible to protect as much of the ill spouse’s income as is necessary for the healthy spouse to remain safely in the community.
Due to another case brought by Czepiga Daly Pope & Perri in 2010 and decided by the Federal Court of Appeals in 2012, it became possible, in married couple situations, for substantial assets to be protected and made available to the healthy spouse by purchasing an irrevocable annuity that paid income to the healthy spouse for a fixed period of time. But the state took the position that there were severe limitations on the amount of the ill spouse’s income that could be protected for the healthy spouse.
For married couples, there are three basic protections for the healthy spouse:
1. The principal residence is an exempt asset and protected for the healthy spouse.
2. Of all of the combined assets of the married couple, the healthy spouse is allowed to keep approximately $123,000. Assets above that are at risk but can, in certain situations, be protected by use of the annuity strategy pioneered by Czepiga Daly Pope & Perri or, if modest in amount, spent down for the benefit of the healthy spouse.
3. The healthy spouse is allowed to keep all of his or her own income, regardless of amount, but if the healthy spouse’s income is modest, the state will allow the healthy spouse to get as much of the ill spouse’s income as is necessary to bring the healthy spouse’s income up to a certain amount, but not to more than $3,000/month in total combined income.
For a married couple with significant assets, the main goal is to protect those significant assets that are at risk over the $123,000 maximum that the state allows. The 2012 Federal Court case and annuity strategy pioneered by Czepiga Daly Pope & Perri largely solved this problem.
But what of the couple with modest assets where one of the spouses has significant fixed income and goes to a nursing home? Say, for example, the husband has pension and social security income of $5,000/month combined, the wife has social security of $1,200/month, and their combined assets, exclusive of the personal residence, are $200,000.
The couple’s standard of living is reliant upon husband’s fixed income, so the goal is to protect the ill spouse’s income. Prior to Czepiga Daly Pope and Perri’s favorable Connecticut Supreme Court decision, the state would, at most, allow the wife to keep $1,800 of the husband’s income to give her the maximum monthly income amount the state would allow of $3,000. The wife’s income plummets from $6,200/month to the $3,000/month cap and she may very well not be able to afford to stay in her home any longer.
As a result of the Connecticut Supreme Court decision, for married couples who intend to apply for Medicaid benefits, it is now possible for the healthy spouse to keep as much income as is needed to remain safely in the community, even if means keeping more than the state’s $3,000/month cap or even keeping the entire $6,200/month of income.
-- Press Release