Medicare, Medicaid and Dementia

Neurospouse has a friend whose husband has dementia. She is reluctant to get him into a facility for care because she fears that because he is physically healthy, all their money will get used up paying for his care, leaving nothing for her.

I suspect they are in a different financial situation than we are (she was a traditional housewife I think), and I assured Neurospouse that she would be fine if it happened to us (I am 8 years older than her) because we each have our own IRAs and the one needing care would spend down their own money and then qualify for medicaid.

I’ve been doing a little research and it seems like that might not be true.
Our home would be exempt (via ‘intent to return’ documented) but both spouses IRAs would be included in income and assets, so essentially our entire savings would get spent on the first spouse to need it.

This doesn’t seem right. Would divorce help? We are not in a community property state, so that would seem to allow us to keep assets separate if we found ourselves in this situation.

FWIW, we are not showing any symptoms of ending in such a situation. I would expect we could self-fund such care anyway for a substantial period of time.

Any thoughts or advice?


Only if you guess right. I’m pretty sure there is a lookback period similar to other ones that require a few years (3? 5?) after the divorce for the assets to be considered fully split for government program benefits. So as far as guessing, you have to guess right which spouse, 5+ years in the future, will require expensive care that you want government to pay for instead of you paying for them. At best, you could split the assets 50/50, and then when one spouse requires expensive care, you can spend down that 50% till whatever low minimum of assets is required before being eligible for government programs, and then switch to the various government programs.

Maybe an irrevocable trust of some sort would help? I don’t know enough to answer that. Maybe @aj485, our resident tax expert, might have some insight into it? Of course, trusts almost surely also have lookback periods, but maybe can be used early on to protect all the assets instead of only 50% of them?

Whether right or wrong is a philosophical issue. But nobody can say that they weren’t warned! Remember the “in sickness and in health” part of their marriage vows? That clause doesn’t appear to have any exceptions like “in sickness for emotional support, but not for paying the bills”.

[EDIT: I just found this link about it -]


Thanks @MarkR for the link.
That was very helpful.
In our case, our IRAs are roughly equal and our assets are well above the amount where it is not deemed to be worthwhile.

At $100K per year, either of us could manage 10 years or more of care individually and by the time we need it, that should be sufficient - given that we are not showing signs of dementia yet.

But an amicable Medicaid divorce does seem an option for some.

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Attorneys that specialize in elder law can help with this problem. Social workers at various agencies such as your hospital can probably recommend a good one.

They can help find solutions and know how to qualify for Medicaid and protect assets for surviving spouse.

She needs to see an eldercare attorney sooner, rather than later, for her own health, since caring for someone with dementia is very stressful, even with a great support system. With the help of an eldercare attorney, she can put their assets into a Medicaid trust that will pay out to her for a time period based on her expected life. Medicaid will begin to pay for his care once that trust is implemented. Medicaid will also likely require any pensions and SS payable to him will be used to help pay for his care, so she will likely need income from the trust. The rules are state-specific, and can be very picky, so she needs to find an eldercare attorney who is familiar with the rules of their state.

As mentioned above, assets can be protected through a Medicaid trust.

Yes, that’s another way to protect assets from Medicaid. On the other hand, spouses have protections in inheriting assets that non-spouses don’t, such as being able to treat an inherited IRA as their own. And you would have to see if both of you filing single would result in more taxes than you pay as a couple MFJ. You would also need to be sure that your state laws allow you to still act as each other’s healthcare proxy, power of attorney, etc. if that’s your intention.

See an eldercare attorney in your state to get a plan set up to be implemented if you do find yourself in this situation. It will be much less stressful to have a plan already set up than trying to implement one from scratch like your friend will have to do.