Spousal Planning for TennCare/Medicaid. Recent Changes In The Law

When a married couple considers paying for long-term care with TennCare/Medicaid, they are split into two categories: Institutionalized Spouse (IS) and Community Spouse (CS). It is essential to understand the differences between the two when Spousal Planning for TennCare/Medicaid. Specifically, the IS is applying for TennCare/Medicaid benefits while the CS is not. Under the same application, Medicaid always determines whether spousal resources are countable or exempt. As you would expect, countable resources can prevent eligibility, but exempt resources do not. Traditionally, retirement accounts, such as IRAs and 401Ks, for the IS are always countable resources for qualification purposes. On the flip side, the CS’s retirement accounts did not count if the CS was taking monthly payments equal to a required minimum distribution (RMD).

Can a Retirement Account Be Excluded? 

This rule recently changed. If a CS has the option of withdrawing funds in a lump sum, the retirement account is considered a countable resource. This occurs no matter if an RMD is possible. The retirement account can be an excluded resource if the CS is required to terminate their employment to access the funds. Or if they receive periodic payments (e.g., pension or annuity). However, the period payment option would require the pension to be outside the control of the CS. Or that the annuity be set up to meet or modified to meet exact Medicaid rules. Otherwise, distributions and systematic withdrawals from a retirement account are conversions of a resource rather than income. And when a lump sum amount can be withdrawn. These are all important to understand when spousal planning for TennCare / Medicaid.

We Can Help With Spousal Planning for TennCare / Medicaid

These recent changes significantly affect how spouses plan for TennCare / Medicaid. The goal is to avoid huge mistakes that can upset crucial planning. If you have any further questions about TennCare/Medicaid, your retirement accounts, or long-term care planning, please get in touch with Angel Kane at Kane & Crowell. Attorneys At Law or by phone at (615) 784-4800.