How a Medicaid divorce can save you millions.

Leave it to the scions of Washington D.C. to break up middle class marriages.

Under current law if your spouse enters a nursing home, both of you are obligated to pay for care. With an average Social Security check at about $14,000, the cost of a nursing home is impossible to pay out of current income. Most folks dip into savings.

But even a family with say, $400,000 saved over a lifetime, will see that money rapidly disappear because nursing home care is not covered by Medicare. You have to pay 100% of the costs.

To give you better sense of these expenses the states with the most expensive median annual rate for a single person’s private room bed in a nursing home:

  1. Alaska – $259,515
  2. Connecticut – $158,775
  3. Massachusetts – $139,430
  4. New York – $136,510
  5. Hawaii – $135,050

The states with the least expensive median annual rate for a single person’s private room bed in a nursing home:

  1. Oklahoma – $60,225
  2. Missouri – $60,955
  3. Louisiana – $62,050
  4. Kansas – $65,700
  5. Arkansas – $65,700

Double all the above numbers for two persons.

The table below shows the range of costs by state in 2015 of the daily rate for a private room.

State Minimum Median Maximum
Alabama $140 $209 $396
Alaska $461 $771 $1,255
Arizona $164 $233 $650
Arkansas $130 $180 $865
California $144 $285 $913
Colorado $179 $256 $650
Connecticut $215 $435 $505
Delaware $232 $323 $350
District of Columbia $270 $270 $270
Florida $180 $265 $505
Georgia $120 $195 $679
Hawaii $263 $370 $616
Idaho $176 $243 $369
Illinois $130 $204 $1,035
Indiana $150 $250 $450
Iowa $148 $187 $298
Kansas $145 $180 $288
Kentucky $175 $239 $805
Louisiana $112 $170 $500
Maine $215 $295 $443
Maryland $200 $302 $464
Massachusetts $225 $382 $489
Michigan $197 $272 $464
Minnesota $167 $263 $424
Mississippi $177 $220 $300
Missouri $130 $167 $380
Montana $175 $220 $287
Nebraska $133 $218 $600
Nevada $135 $270 $508
New Hampshire $275 $335 $514
New Jersey $249 $350 $449
New Mexico $175 $234 $473
New York $226 $374 $1,080
North Carolina $108 $225 $630
North Dakota $169 $288 $407
Ohio $118 $235 $465
Oklahoma $135 $165 $340
Oregon $185 $280 $345
Pennsylvania $155 $310 $1,015
Rhode Island $190 $283 $356
South Carolina $122 $206 $349
South Dakota $176 $212 $257
Tennessee $152 $207 $412
Texas $101 $188 $391
Utah $147 $210 $500
Vermont $260 $288 $500
Virginia $175 $254 $765
Washington $191 $289 $525
West Virginia $210 $295 $365
Wisconsin $185 $273 $836
Wyoming $190 $245 $300

Private rooms cost only about a thousand or two more a year, compared to semi-private rooms. Medicaid will not pay for private rooms, but even though the price difference to the cash customer is minimal, nursing homes can charge Medicaid recipients as much as they want for upgrades, and they do. Semi-private, by the way, can be four patients in a room, not just two.

An excellent Genworth study of nursing home costs  can be downloaded here.

That $400,000 the two of you saved will last a few years, but then it runs out and you have to apply for Medicaid – and be assigned to the “poor” wing of the nursing home. The government now actually decides how much the two of you can own – about $120,000, and until that limit is reached, you have to pay all the bills yourself.

When the remaining spouse enters the nursing home, only assets of less than $3,000 can remain before qualifying for Medicaid. In short, the family has become impoverished. In addition, if they still own a home it can be sold at their death to pay past Medicaid care, and not just inherited by the beneficiaries.

On the other hand not being married changes everything. Divorce ends the couple relationship. Your assets cannot be seized to pay for non-spouse nursing home care. Former spouses can have as much money in the bank as possible – instead of the $120,000 mandated for the remaining spouse in a marriage.

Divorce is also used by many seniors to reduce income taxes, since about $32,000 total income is the limit for couples to receive Social Security, while singles can go up to $25,000 each.

Seniors generally get hit hard by government rules. For example, they are not eligible for Obamacare, which ends exactly at age 65, even though those plans are better and cheaper. Another example is the Earned Income Tax Credit, which pays you for low earnings up until the age of 65, but not one day more, even if you are still working and not even claiming Social Security.

This discrimination has been wrongly attributed to seniors being the major beneficiaries of programs like Medicaid and the need to cut expenses.

The truth, of course, doesn’t always match the claims made to calm our senior anger.

Medicaid now has 72.5 million recipients. Of these, only 4.6 million are seniors – the vast majority of them in nursing homes.

One response

  1. […] while nobody wants to live in dire circumstances, there are subsidies in America for the poor. Free Medicaid pays for everything, even all drugs, dental and eyeglasses. Some poor pay $100 a month for a $1,000 […]

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