For the "Community Spouse"

I told you this post was gonna happen...but, looking back, I'm sorry I decided to put my blogging toe into the financial cesspool that is GETTING OLD IN AMERICA...

Even though I was clear that I do NOT consider myself an expert -- I've been taken to task by many people who actually ARE experts.  Ugh.  Really...it was never my intention to give anybody financial advice. 

Remember -- I'm not a lawyer...I'm barely a quilter.  And I understand that everybody's circumstances are different.  I decided to write about my own experience...cuz it's been kinda overwhemling.  But what has been problematic for me may not be a concern for you...

So -- here we go.  This is my third (and I PROMISE YOU -- MY LAST) post about financial stuff.

Here's the thing....I intend to care for John at home as long as I possibly can.  But,  Alzheimer's is the long goodbye -- and we are talking YEARS.  So, realistically, I need to consider what will happen if I have to put John "into care". (that's lawyer-speak for a nursing home).

Or -- worse yet -- what if I die first? THEN what happens to John?

The best way for me to explain this to you is by using an example.

Mr. and Mrs. Smith have been married for 50 years. They have $460,000 in various accounts, including the bank, the stock market, IRA's, a beautiful home, several cars and a plethora of wonderful personal belongings.  He has Alzheimer's.

Sooner or later, Medicaid will pay for nursing home care.   The "sooner" happens right away if you DON'T have any money.  (less than $2000 worth of assets).

The reality is that the "later" happens if Mr. and Mrs. Smith have money.  How much later depends on how much money they have.   And, hey -- DON'T GET ME WRONG.  I don't believe the taxpayers should pick up the tab for a lot of rich people who go into LTC (long term care).  But it does feel as though you are punished for working hard, being responsible and saving throughout your life...

Cuz -- here's how it works...

In Iowa, (every state is different) the "community spouse" (Mrs.) is allowed to keep $130,000...plus the home she lives in, the car she drives, pre-paid funeral plans and personal belongings.

At this point, my lawyer used a nifty a graph....(wishing I had those skills...)

Imagine a big pie...with $460,000 in it. Iowa draws a line in the middle -- giving $230,000 to each spouse. THEN, they deduct $100,000 from the Mrs. side (taking her down to the allowable $130,000) -- and add it to the Mr. side. So, now, Mrs. has $130,000 and Mr. has $330,000 in assets on the DAY he goes into a nursing home.

The average cost of a nursing home is $8000 a month, so Mr. will private pay for his own care until he spends down the original $330,000 to $2,000. Then, medicaid will start to pick up the tab.

So, that's how it works.

The good news is that, when I was making the design choices for our new Co-op, I thought I should be careful about spending extra money. THEN, my lawyer said, "get all the upgrades you want, Rita. They bring value to your home, and that's one of the things you will be allowed to keep, even if John ends up in long term care."

She also told me to upgrade my car....and pre-pay for our funerals.

Hummm...personal belongings? Maybe it's time to update my sewing room...

AND -- who wouldn't like a new car??

One more important thing to consider. 

THE FIVE YEAR LOOK BACK. 

On the DAY Mr. goes into care, the clock ticks BACK. Medicaid does a five year "look back" to make sure you didn't gift any assets. So, during that five years, you may not put your home in your children's name, or give them money, or buy them elaborate gifts.

Once medicaid kicks in, the state will conduct an audit of the last five years -- and any such "gifts" would all have to be paid back to the Mr. account...

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That's it for me.  I regret taking on this topic...and you will be happy to know tomorrow -- I'm going back to writing about things I actually KNOW ABOUT.  

I'm gonna Frankensew some sweatshirts...and YOU WILL NOT BELIEVE how much much work I've done on the Vintage Buffet!!