As of the beginning of 2025, there are new figures issued for various government programs that affect older adults. Among those are numbers associated with long-term care Medicaid benefits. These are Medical Assistance benefits that pay for nursing home care or care at home under one of several Medicaid Waiver Programs. There are two important Medicaid figures that changed as of January 1, 2025.
The first is the Spousal Resource Allowance. This figure represents the resources that the spouse of a Medicaid applicant can keep when the applicant is approved for Medicaid. Most of a married couple’s resources are counted when determining eligibility for Medicaid, although there are some exempt resources such as the primary residence, the most valuable car, and personal property. The remaining countable resources are totaled and divided in half. It is not relevant which spouse contributed to the countable resources. However, the income of the spouse not entering the nursing home is exempt, as is their IRA or other qualified retirement account.
Half of the countable resources belong to the spouse applying for Medicaid, while the other half belongs to the spouse staying at home and is often referred to as the Community Spouse Resource Allowance. There is a maximum and a minimum countable Resource Allowance that can be kept by the community spouse. In 2025, the maximum Resource Allowance is $157,920, while the minimum Resource Allowance is $31,584.
The Medicaid applicant’s share of the resources must be spent down or reduced in some fashion to a very small sum before they are eligible for Medicaid. If the community spouse’s Resource Allowance is greater than the maximum Resource Allowance, that excess must also be reduced before the applicant is eligible for Medicaid. There is Medicaid planning that can be done to shelter the excess resources, such as spend-down planning techniques, and the use of spousal annuities in a married situation.
The second figure of note is the penalty divisor for long term care Medicaid benefits. To be eligible for Medicaid, the applicant must disclose any transfers of resources made within the five (5) years prior to the filing of the application for benefits. Depending on the amount of the uncompensated transfers, a period of ineligibility for Medicaid could be assessed against the applicant. The amount of time that the applicant is not eligible is dependent on the total amount of the gifts and the penalty divisor.
The new divisors for 2025 are $399.80 per day and $12,160.58 per month. Therefore, an applicant who gave away $40,000 in the five (5) years prior to the application, would be ineligible for about 100 days or a little over 3 months. This period of ineligibility begins at the time the applicant is otherwise eligible for Medicaid benefits.
