Second Costliest Mistake

  • Failing to use non-exempt assets to protect the spouse’s income
  • Federal law provides another important protection for the community spouse: the “monthly maintenance needs allowance” or MMNA for short.
  • The MMNA is an amount of income allowed to the spouse in the amount $2,980 a month. A formula incorporating “shelter costs” such as utilities, rent or mortgage costs, real estate taxes and insurance premiums determines where the spouse falls between the minimum and the maximum.
  • Many spouses have income below their allowed MMNA. It quite often makes sense, if at all possible, to use the couple’s non-exempt assets to raise the community spouse’s income. Here’s an example:
  • Jones, who was the family breadwinner, recently entered a nursing facility. His wife Mary, who stayed home to raise the children, receives $584 per month from Social Security as her only income. She is approved for a MMNA of $2,980 a month. Her husband has income totaling $1,833 a month. The couple has $180,000 in non-exempt assets.
  • If they apply for Medicaid on their own, they will be denied benefits until they spend down $82,000. The gap between Mrs. Jones’ MMNA and her income will then have to come from Mr. Jones’ income. If her husband dies, Mrs. Jones may experience a drastic reduction in the income she receives for the remainder of her life.
  • However, with the right legal help, they may be able to purchase an annuity within Texas guidelines that would provide additional ongoing income to Mrs. Jones, and allow Mr. Jones to qualify sooner for Medicaid benefits. Rather than spend the money down, the couple could use their assets to ensure that Mrs. Jones has more long-term income.
  • Due to changes in Medicaid law in recent years, the process for using non-exempt assets to provide income for the spouse has become so complex that virtually every married applicant needs the advice of an elder law attorney to know whether to pursue this approach, and how to do it.
  • Solution:Couples should usually make it a major goal to obtain and maintain
  • income for the spouse, who may live for 10 or 20 years or longer. Prior to spending down assets, consult an elder law attorney experienced in Pennsylvania Medicaid law to find out how to use assets that might otherwise be spent down to provide income for the spouse.


Thanks, Richard,

If you need additional information on this or any other aspect of Elder Law then go to our web site or call us at 1-800-939-9093