Will my husband’s poor health choices cost me my savings?

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Will my husband's poor health choices cost me my savings?

My concern is that he is going to financially take everything I have saved and worked hard for with his consistent medical expenses. I fear he could end up in a nursing home.

-T.

Dear T.,

Robin Hartill [ The Penny Hoarder ]

Story Highlights

  • My spouse suffered from a stroke three years ago. He is unable to work and is receiving Social Security and is very noncompliant about his health. I am currently and have been the breadwinner for this family.

  • I have thought about divorce, but I know he would take half of my retirement. I am 62, and I hope to be able to retire at 65. How can I protect my retirement from the possible nursing home and medical expenses?

Watching your spouse jeopardize his health and risk your future in the process has got to be agonizing. Unfortunately, the threat of unmanageable medical bills is far too common since Medicare only covers the first 100 days of skilled nursing care.

Paying for a nursing home can quickly erase a lifetime’s worth of savings. The average cost of a semi-private room in a skilled nursing facility is over $7,700 per month, according to Genworth’s 2020 Cost of Care survey. Eventually, Medicaid will kick in — but only after someone has depleted almost all of what’s called countable assets, which include things like retirement accounts and other investments, cash, bank accounts and homes that aren’t used as a primary residence.

When one spouse needs Medicaid but the other doesn’t, the non-applicant spouse can typically keep no more than $137,400 of countable assets. That’s not much if you’re expecting a long retirement. But you do have options for preserving the money you’ve worked hard for over the years. It’s essential that you consult with an elder care attorney. Medicaid planning is extraordinarily complex, and the laws vary significantly by state. You can use the National Academy of Elder Law Attorneys database to search for an attorney near you.

You’re correct in that if you divorced, your husband would probably be entitled to part of your retirement. But most attorneys don’t recommend getting divorced solely to qualify one spouse for Medicaid for a host of reasons that are too complicated to delve into here. One option you should discuss with an attorney is a Medicaid-compliant annuity. In a nutshell, Medicaid considers the income of the spouse who’s applying for coverage, but the other spouse’s income is off-limits. A Medicaid-compliant annuity takes part of your assets and converts it into a fixed income stream. The payments are based on your life expectancy, calculated according to Social Security’s life expectancy table.

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