As a husband, what financial steps should I take to protect both my wife, as she progresses through the steps of Alzheimer's, and myself?

Jls asked...

As a husband, what financial steps should I take to both protect my wife as she progresses through the steps of Alzheimer's and myself?  I need to take to protect my finances as the treatment gets more expensive.

Expert Answer

Barbara Steinberg is the CEO and founder of BLS Eldercare Financial Solutions, which specializes in helping families pay for long-term care for their loved ones. A registered financial gerontologist, she speaks regularly on the topic of paying for long-term care and is a financial expert for Caring.com.

Illnesses such as Alzheimer's that necessitate long term care can be devastating for a family's finances. The "healthy" spouse is faced with the prospect of high out-of-pocket expenses for medical and personal care for the ill spouse, while still paying for his own living expenses. It is frightening to see how quickly assets can be spent down.

Medicaid is the government program that pays for long term custodial care. Eligibility is based on medical and financial need. Each state has its own rules about how much a person can have in assets in order to qualify. It is usually $2,000 - $3,000. There are also rules for how much the "community spouse" can have, The amount ranges from $20,000 to a little over $100,000, depending on the state. These numbers do not include a personal residence, a car, personal property and a few other exceptions. Check with an eldercare advisor or your county Medicaid office to find out the rules for your state.

Some people choose to transfer assets out of their names by making gifts to a relative or a trust. With the new Medicaid rules, a penalty will be imposed for gifts made during the "look back period." This is the 3 to 5 years (depending on your state) prior to making an application for Medicaid. The penalty is calculated based on the amount of the transfer and the average monthly nursing home cost in your state. The penalty is the number of months you must pay out-of-pocket before Medicaid takes over.

As you can see, Medicaid planning can get complicated. It is important to work with a Medicaid-knowledgeable advisor to preserve as much of your assets as possible.