Key Points to Remember in the Computation of the Community Spouse Resource Allowance

The community spouse resource allowance has been discussed in Posts 8, 13, 26, 30, 50 and 60.

Experience has borne the fact that actual computation of the community spouse resource allowance often involves issues that raise some thought.

The following are some points to remember in computing the protected amount:

1. The community spouse resource allowance is only to consider resources that are countable for Medicaid purposes. For example, the primary residence is an excludable resource and is not to be treated as part of the computations.

2. Bank accounts generally provide the balance in the middle of the month. Request the client to get a letter from the bank as of the appropriate date, the first moment of the first day of the month of institutionalization, in reality, is the close of business on the prior day.

3. A certificate of deposit that is due in several weeks arguably is hard to value. That is, it has been my experience that if a family requests the funds without any penalty, that the bank will comply.

4. If there are assets subject to a penalty for withdrawal such as an IRA or an annuity, the withdrawal penalty is not to be considered. With respect to an IRA, it is suggested that the stocks be sold within the IRA (no tax at that point) so that after distribution and income tax, there is not an additional tax due to the necessity to liquidate appreciating assets.

5. Joint property (such as real estate) is to be valued at one-half the fair market value of the real estate. This is different than the treatment for death tax purposes since a fractional interest in real estate is often discounted for fractional interests.

As the above indicates, numerous technical issues arise throughout the Medicaid process, but for purposes of computing the community spouse resource allowance they must be addressed immediately so that eligibility can be projected.


Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.

© April 2009, Post 74