Medicaid Planning for Married Couples: Spousal Protections Explained
When one spouse needs nursing home care, married couples often face financial uncertainty. Medicaid can provide vital assistance for long-term care costs, but navigating the rules as a married couple adds layers of complexity. Without a plan, one spouse could end up impoverished while the other receives care.
This guide explains everything you need to know about Medicaid planning for married couples, including how assets are counted, which strategies protect your financial future, and what common mistakes to avoid.
Why Married Couples Must Plan for Medicaid Early
Married couples face a unique challenge when one spouse needs long-term care. Medicaid has strict income and asset limits, and it evaluates both spouses’ finances together, even if only one applies for benefits.
The Danger of Spousal Impoverishment
Before spousal protections were introduced in federal law, a healthy spouse—also known as the community spouse—could be left with almost nothing after their partner qualified for Medicaid. While Medicaid now includes spousal impoverishment protections, these are limited, and many couples don’t use them to their full advantage.
Failing to plan can result in:
- The community spouse being left with only a fraction of the couple’s savings
- Forced sale of assets like a second home or vehicles
- Denial of Medicaid benefits due to excess assets
- Emotional and financial stress during a healthcare crisis
Early planning can ensure both spouses remain financially secure.
Understanding Medicaid Terminology for Couples
Medicaid eligibility is based on complex rules and terminology. Understanding the terms below is essential for informed decision-making.
Community Spouse and Institutionalized Spouse
- The institutionalized spouse is the one applying for Medicaid, typically because they require nursing home care.
- The community spouse is the healthy spouse who remains at home.
Both spouses’ finances are reviewed during the Medicaid application process, even if the institutionalized spouse is the only one seeking care.
Community Spouse Resource Allowance (CSRA)
The CSRA is the amount of assets the community spouse is allowed to keep while the institutionalized spouse qualifies for Medicaid. The federal maximum CSRA for 2026 is $154,140, but the exact amount can vary by state.
Assets over the CSRA must be “spent down” before the institutionalized spouse becomes eligible, unless protected through planning strategies.
Minimum Monthly Maintenance Needs Allowance (MMMNA)
The MMMNA ensures the community spouse has access to enough monthly income for living expenses. In New York State for 2026, the MMMNA is $4,066.50.
If the community spouse earns less than this amount, Medicaid allows income from the institutionalized spouse to be transferred to meet this threshold.
Medicaid Eligibility Rules for Married Couples
Medicaid looks at both income and assets during the eligibility review. Married couples must be careful to structure their finances within legal limits.
Countable vs. Non-Countable Assets
Understanding which assets are considered “countable” is essential. Medicaid requires that excess countable assets be spent down before approval.
Countable assets include:
- Checking and savings accounts
- Stocks and bonds
- Certificates of deposit
- Retirement accounts (varies by state)
- Real estate not used as a primary residence
Non-countable assets may include:
- One vehicle (for transportation needs)
- Primary residence (up to a certain equity value)
- Household goods and furnishings
- Irrevocable prepaid funeral contracts
- Some annuities and trusts that meet Medicaid standards
Couples can legally restructure assets to fall within the non-countable category, with proper planning.
Important NY-Specific Note: While the primary residence is exempt during the lifetime of the ill spouse, it’s critical to transfer ownership out of the institutionalized spouse’s name before applying for Medicaid to avoid estate recovery after death.
The Medicaid Spend-Down Requirement
If a couple’s assets exceed the allowable limit, the institutionalized spouse will not qualify for Medicaid until the excess is spent down. However, not all spending qualifies. Spending should be done in a way that:
- Benefits the community spouse
- Converts assets into non-countable forms
- Avoids triggering a penalty period
Examples of appropriate spend-down strategies include:
- Paying off a mortgage or other debts
- Making home improvements
- Purchasing an exempt vehicle for the community spouse
- Paying for medical equipment or services
Spending must be documented properly, and transfers must comply with Medicaid’s 5-year lookback period.
How Medicaid Treats Jointly Owned Property
Many couples assume that assets titled in both names or solely in the name of the community spouse are protected. Unfortunately, Medicaid evaluates most joint assets as fully available to the applicant unless clearly exempt.
This includes:
- Joint bank accounts
- Property deeds held in both names
- Retirement accounts in either spouse’s name (depending on the state)
Legal structures such as irrevocable trusts may be needed to protect certain types of property.
Effective Spousal Protection Strategies
There are several legal methods available to preserve the community spouse’s financial wellbeing without disqualifying the institutionalized spouse from Medicaid benefits.
Division of Assets
Medicaid allows for a formal division of assets during the application process. The couple’s total countable assets are split in half, with one half allocated to the community spouse (within the CSRA limits). The remaining half is considered available to the institutionalized spouse and must be spent down.
While this may seem straightforward, timing and asset classification are crucial. Engaging a Medicaid planning professional or attorney is highly recommended.
Use of Irrevocable Trusts
An irrevocable trust can be used to move assets out of the applicant’s name and out of countable status, provided the transfer occurs more than five years before applying for Medicaid. Common uses include:
- Protecting the family home
- Shielding investment income
- Creating inheritance protection for children
The trust must be properly drafted to meet Medicaid rules, or it may be considered a countable resource.
Medicaid-Compliant Annuities
A Medicaid-compliant annuity is a financial tool that transforms countable assets into a stream of income for the community spouse. It must:
- Be irrevocable and non-transferable
- Provide equal payments for the spouse’s life expectancy
- Name the state as the beneficiary after the spouse’s death (for recovery)
These annuities can be used when applying for Medicaid late in the process, making them valuable crisis-planning tools.
Spousal Refusal (NYS Allows This)
In New York, the community spouse can legally refuse to contribute to the institutionalized spouse’s care. Medicaid may still approve the application, although the state can later pursue recovery from the community spouse.
This is a controversial but lawful strategy in NYS, and requires legal counsel.
Common Mistakes Couples Make When Planning
Medicaid planning must be approached carefully. Even well-meaning decisions can lead to disqualification or delays.
Mistake #1: Gifting assets without legal review
Transferring property to children or other relatives within five years of a Medicaid application can result in penalties or outright denial.
Mistake #2: Relying on outdated information
Medicaid rules change frequently and vary by state. Planning strategies must be tailored to current laws and local policies.
Mistake #3: Delaying planning until a crisis
While some emergency strategies exist, options become more limited the closer you are to applying. Starting early opens up more protective strategies.
Mistake #4: Ignoring spousal income rights
Without proper documentation, a community spouse may miss out on income allocations like the MMMNA.
Mistake #5: Failing to consult professionals
Every couple’s financial picture is unique. Only a qualified elder law attorney or Medicaid planner can design a legal plan to maximize protection.
Final Thoughts: Protecting Your Future Together
Medicaid planning for married couples is about more than just qualifying for benefits—it’s about preserving financial dignity for both spouses. The rules are complex, but understanding them empowers you to make informed, legal decisions that protect what you’ve built together.
Whether you’re preparing years in advance or reacting to a health crisis, having a sound Medicaid plan ensures one spouse can receive care while the other continues to live safely and independently.
Frequently Asked Questions (FAQs)
Can my spouse keep our home if I go into a nursing home?
Yes, in most cases. Medicaid allows the community spouse to keep the primary residence, as long as they continue living there. However, after both spouses pass away, the state may seek reimbursement through estate recovery unless the home is protected with tools like irrevocable trusts or life estate deeds.
Will Medicaid take all our retirement accounts?
Not in New York. Retirement accounts in payout status are protected and not countable, but this rule is state-specific.
What happens to our joint savings and investment accounts?
Medicaid typically treats joint assets as entirely countable, regardless of ownership percentages. Unless reclassified or transferred correctly, both spouses’ accounts are evaluated in full. Proper titling and the use of legal tools like trusts or annuities may help shield some of these resources.
Can I still work and keep my income if my spouse is on Medicaid?
Yes. The community spouse is allowed to earn and keep income, and is also entitled to receive income from the institutionalized spouse if their earnings fall below the MMMNA. This income shift ensures the community spouse can maintain financial independence while care is provided.
How soon should we begin Medicaid planning?
The sooner, the better. Ideally, planning should begin at least five years before care is needed to allow asset transfers without triggering penalties. Even if you’re facing an immediate care need, there are legal crisis-planning tools available—don’t delay speaking to a professional.
Contact Angiuli & Gentile, LLP Today
Because Medicaid rules vary by state and circumstances, it’s essential to work with an elder law attorney or certified Medicaid planner. They can create a customized strategy to protect your assets, meet eligibility requirements, and support your spouse during a challenging time.
Take control of your future—contact a Medicaid planning attorney today.
