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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Social Security
Satisfied Customers: 12662
Experience:  Licensed CPA, CMA, CFE, CGMA M.Accy Also Teach Accounting courses at Master's Level
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My wife is 50. She had a stroke and brain tumor and requires

Resolved Question:

My wife is 50. She had a stroke and brain tumor and requires care 24-7.She is disabled and gets SSDI. We are in the process of applying for medicaid for a global options waiver through medicaid. This would allow allow her to get 40 hours a week of home health aid paid by Medicaid. I am only 42. I work full time as a police officer. I make around 110,000. a year. I have around $205,000. in retirement savings. ($145,000. in a 457 plan and $61,000.00 in a supplemental annuity collective trust). I sold my home and we moved in with my mother who is 69y/o and quite ill with cancer. We used the equity from the sale of our home($112,000.00) to put a handicap addition onto my Moms house to care for my wife.

Q: How much do I have to spend down to qualify for Medicaid?
Q:After my wife qualifies for Medicaid if my Mom passes and I inherit her house and some money will this effect my wifes medicaid? How?
Q: After my wife qualifies for Medicaid can I resume contribute to my 457 Plan and my supplemental annuity? They are both through my employer and only in my name. Will this effect my wifes medicaid?
Submitted: 9 months ago.
Category: Social Security
Expert:  Megan C replied 9 months ago.

Megan C :

I realize you have a question about social security. My goal is to provide you with excellent service, and help you better understand your options.

Megan C :

How are you today? I am sorry to hear about your situation.

Megan C :

How much does your wife receive from Social Security?

Customer:

Its actually more specifically about medicaid?

Customer:

Im ok

Megan C :

I want to make sure that she's eligible first, before we get into discussing the rest of the question...if her income is too high, then she can't participate.

Customer:

My wife gets $1316. a month after taxes and medicare from SSDI

Customer:

She does not have any other income

Megan C :

OKay, then she meets the income requirement. As far as assets go, your assets count towards her eligibility.

Megan C :

You can keep your home, plus 1/2 of the assets up to $109,560

Megan C :

So you will have to spend down half of your retirement assets, unfortunately.

Megan C :

But, if you inherit the home, and live there, you won't lose that.

Customer:

What about after she qualifies? Can I start contributing to my 457 plan again or will that count against her?

Megan C :

Well, 1/2 of the asset would have to go towards her, and you couldn't ever accumulate more than $109,560

Customer:

If I inherit some of my Moms IRA will that count against her?

Megan C :

The assets of the spouse are counted...so 1/2 of it would have to be spent down, and you couldn't retain more than $109,560

Megan C :

in tota

Megan C :

total*

Customer:

So the answer to both questions is no? Even if the money is left to me? and the 457 is in my name?

Megan C :

That is correct. A spouse's assets are counted, even though their income is not.

Customer:

What about a secondary residence or a rental property?

Megan C :

Unfortunately, that would be a countable asset

Megan C :

You would need to spend down that asset as well.

Customer:

based on what I disclosed in my initial question how much do I need to spend down?

Megan C :

$102,500

Customer:

what if i sold the house?

Megan C :

Then, you could keep 1/2 of the funds, up to the limit I disclosed above

Megan C :

Let me double check to make sure assets in just your name are not required to be spent down.

Customer:

As I said the 457 is mine through my employer so is the supplemental annuity(through my employer)

Customer:

The house would be left to me

Megan C :

Yes, I realize that. Let me double check.

Customer:

additionally will I be penalized for having to cash in the 457?

Megan C :

Yes, if you had to cash in the 457 plan as you are under 59.5 you would be penalized 10%

Customer:

Even if it is because there is unexpected medical emergency? I thought that was allowed?

Megan C :

Yes, both of your assets count towards the limit. So you would have to spend it down.

Megan C :

The information on this can be found, HERE

Megan C :

You can get a penalty free withdrawal to the extent that you have medical expenses over 7.5% of your AGI

Customer:

What is AGI?

Megan C :

Adjusted Gross Income

Megan C :

Its from your tax return

Customer:

Also I dont think 59 1/2 age limit applies to 457 only 401k and 403b

Megan C :

You're correct. You would not be penalized, unless you had rollover funds inside your 457 which came from one of those sources

Customer:

Can u give an example have of how what my medical expenses would have to be to avoid penalty?

Customer:

I dont. It has all been from 457 plans.

Megan C :

You won't be subject to the penalty

Megan C :

You won't be subject to the penalty then

Customer:

I wont be subject to penalty because it is 457 plan?

Megan C :

That is correct

Customer:

Ok so I can Leave the annuity of $61000. alone cash in the 457 down to 38,000.?

Customer:

and obviously stop contributing to both?

Megan C :

Yes, so long as your assets are below the limit as specified

Megan C :

and yes, there would be no point in contributing to these assets

Customer:

isnt the first $23,000. not counted?

Customer:

Is there a limit in the value of the house?

Customer:

It is probably worth $600,000.

Megan C :

There's not a limit on the house, provided the community spouse is still living there. If you moved from the house, then you would have to sell it and spend the assets down.

Megan C :

How it works, is that you can keep the greater of 1/2 of your resources up to the limit, or $21,912

Megan C :

So if you only had $20,000 you could keep all $20,000.

Megan C :

but in your case you can only keep half.

Customer:

ok. Thanks. It sucks. Dont get sick

Megan C :

I know it. Or, purchase long term care insurance when you're young.

Customer:

My wife initially got sick when she was 34. So long term care insurance was never really an option.

Megan C :

Yes, that is very young.

Customer:

If I am left a trust by my Mother with a monthly stipend instead a lump sum will that make a difference?

Megan C :

That will be income to you, and the trust is not your asset.

Megan C :

The trust is a separate legal entity, so if all you get is income from that, the assets in the trust are safe.

Customer:

So that would probably be the best option for me

Megan C :

Yes, it would

Megan C :

Is there anything else that I can assist you with today?

Customer:

ok. Yes how can I print this up?

Megan C :

You can use your browser's print function.

Megan C :

Or copy and paste it into Word

Megan C :

If there's nothing else I can assist you with, please take a moment to rate my response as "excellent" so that I may receive credit for assisting you today

Customer:

thanks

Megan C, Certified Public Accountant (CPA)
Category: Social Security
Satisfied Customers: 12662
Experience: Licensed CPA, CMA, CFE, CGMA M.Accy Also Teach Accounting courses at Master's Level
Megan C and 4 other Social Security Specialists are ready to help you
Expert:  Megan C replied 9 months ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

What happens now?

If you haven’t already done so, please rate your answer above. Or, you can reply to me using the box below.
Expert:  Megan C replied 9 months ago.
Thanks, Paul for your positive rating. Please come back and visit me any time you have a question that needs answered. It was a pleasure working with you today.

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