Many people assume that if one spouse needs long-term care and applies for Medicaid, the couple will lose everything. Fortunately, Medicaid rules include protections designed to prevent the healthy spouse from becoming impoverished.

Understanding how these rules work can help families plan more effectively.

The “Community Spouse” Rule

When one spouse requires long-term care and the other spouse remains at home, Medicaid refers to the healthy spouse as the community spouse.

Federal and Pennsylvania Medicaid rules allow the community spouse to keep certain assets and income so they can continue living independently.

These protections are often called spousal impoverishment protections.

Asset Allowances

Medicaid divides the couple’s assets between the spouses when determining eligibility. The community spouse is allowed to retain a portion of the couple’s resources.

While the exact limits change periodically, the rules generally allow the community spouse to keep a substantial share of the couple’s savings, investments, and other financial assets.

Certain property is also typically excluded from Medicaid calculations, including:

• The primary residence (within equity limits)
• One vehicle
• Personal belongings and household items
• Certain prepaid burial arrangements

Income Rules

Income is treated differently from assets. In many cases, the spouse receiving care may be required to contribute most of their income toward the cost of care.

However, if the community spouse does not have enough income to meet their basic needs, Medicaid rules may allow them to receive a portion of the institutionalized spouse’s income.

This protection is designed to ensure that the spouse at home has sufficient funds to cover living expenses.

Why Proper Planning Matters

Although Medicaid provides protections for spouses, the rules are complex. Families often benefit from careful planning to ensure that assets are preserved while still qualifying for needed care.

An experienced attorney can help evaluate the couple’s financial situation and develop a strategy that protects both spouses.