Will my husband’s poor health choices deplete my life savings?

Dear Petunia,

My spouse had a stroke three years ago. He is unable to work, is receiving social security payments, and is very dissatisfied with his health. I am and have been the breadwinner of this family.

What I worry about is that he will use his usual medical expenses to take away everything I saved and work hard financially. I am worried that he will eventually enter a nursing home.

I thought about divorce, but I knew he would bear half of my pension. I am 62 years old and I hope to retire at 65. How can I protect my retirement life from possible nursing homes and medical expenses?


Dear T.,

It must be painful to watch your spouse endanger his health in the process and risk your future.Unfortunately, the threat of unmanageable medical expenses is too common because medical insurance Only the first 100 days of professional care are covered.

Paying for the nursing home can quickly wipe out the savings of a lifetime. According to Genworth’s 2020 Nursing Cost Survey, the average monthly cost of a semi-private room in a professional nursing facility exceeds US$7,700.Eventually, Medicaid will start-but only if someone has exhausted almost all the so-called countable assets, including things like Retirement account And other investments, cash, bank accounts and houses that are not used as primary residences.

When one spouse needs Medicaid and the other does not, the non-applicant spouse can usually keep countable assets up to $137,400. If you look forward to long-term retirement, that’s not too much.

However, you do have the option of keeping money from years of hard work. Consultation with an aged care lawyer is essential. The Medicaid program is very complicated, and the laws of each state are also very different.you can use it National Senior Lawyers College Database Find a lawyer near you.

You are right, if you divorce, your husband may be entitled to part of your retirement. But most lawyers do not recommend divorce just to make the spouse eligible for Medicaid. There are many reasons. These reasons are too complicated to study in depth here.

One option you should discuss with your lawyer is an annuity that meets the criteria for Medicaid. In short, Medicaid will consider the income of the spouse applying for insurance, but the income of the other spouse is prohibited. Annuities that meet the Medicaid criteria will take up part of your assets and convert them into a fixed income stream. Payment is based on your life expectancy, calculated according to the social security life expectancy table.

For simplicity, suppose you have $257,400 in calculable assets, which would put you $120,000 above the threshold for Medicaid. You use the $120,000 to buy an annuity. If your life expectancy is 10 years, then you will immediately begin to receive monthly payments of $1,000 or $12,000 per year for the next 10 years.

Insurance companies make money by investing your principal. This is a great tool for married couples when only one spouse needs care, because remember that the income of the other spouse is not used for Medicaid eligibility.

Annuities must follow many rules to be considered eligible for Medicaid. For example, it must be a single premium instant annuity, which means you buy it in one go and start paying immediately. If you choose to follow this route, it is important to specifically look for annuities that meet the criteria for Medicaid. Annuities advertised as “Medicaid friendly” usually do not meet all the rules.

If you have debts, you can also use part of your assets to repay them so that you can minimize expenses when you retire. Repayment of mortgage balances, personal auto loans, or credit card balances generally does not violate Medicaid regulations. If the two of you own your house, there is no limit to your home equity as long as you continue to live there.

Depending on your state, you may have other options. For example, if you live in Florida or New York, you may be able to use the spouse rejection strategy, and you will basically sign a written statement refusing to share the cost of your husband’s care.

If your husband needs long-term care, these are just some possible strategies. However, I cannot emphasize the importance of consulting an experienced lawyer on how to protect your assets. You may not need to take any action immediately. However, as long as you know what options you have, you will rest assured.

Robin Hartill is Penny Hoarder’s certified financial planner and senior author.Send your tough money questions to [email protected].

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