Protecting separate assets from Medicaid

Updated: Jun 3, 2019

This column first appeared in the San Antonio Express News on May 4, 2018.

Dear Mr. Premack: If a Marital Property Agreement exists and finances have not been co-mingled, can the assets of one spouse be considered when the other spouse needs to apply for Medicaid assistance or is there a way to keep them from being considered or sheltered? – SS

In this context, we are talking about using Medicaid to pay the costs of nursing home care for a qualified senior. In order to qualify, federal law creates two financial hurdles: 1) monthly income must be below a certain amount, and 2) countable assets must be below a certain amount. For your question, we’ll assume that income is low enough to bypass that hurdle, and address only the asset question.

Medicaid is administered by the states based on standards established at the federal level. When Medicaid asks about assets, it wants to know about any assets belonging to either spouse. There is no distinction in Medicaid for separate property versus community property.

Here is an example. Helen is 75, widowed, and has assets valued at $750,000. Arnold is 75, widowed, and has assets valued at $50,000. They meet, fall in love, and decide to marry. They sign to a Marital Property Agreement to keep their assets separate under Texas law. They agree to have no community property, to pay their own expenses, and that each of their assets will remain separate property.

This arrangement works well for ten years. Then Arnold becomes ill and nursing home care is unavoidable. Most of his money is spent on the nursing home. His children and Helen agree to apply for Medicaid for Arnold. On the application, can they report what little is left of Arnold’s money while ignoring Helen’s money? No. They must report Helen’s money, and it disqualifies Arnold from receiving Medicaid.

Without Medicaid, how will they pay for Arnold’s nursing home care? Because of the Marital Property Agreement, Helen has no legal obligation to pay for Arnold’s care. Might Helen consent to pay (even though she is not legally obligated to do so)? Might Arnold’s children consent to pay (even though they are not legally obligated to do so)? Will they take Arnold home and provide care as best they can using their time and energy?

Are there other solutions? There are two possibilities. 1) Helen and Arnold could get a divorce. The Marital Property Agreement will be honored by the Texas court, and Helen’s assets will remain with her after the divorce. Medicaid will honor the divorce decree, Arnold’s assets will be low enough, and Medicaid will help pay the nursing home bill. 2) Without divorce, Helen and Arnold may be able to rely on an obscure Medicaid rule called the Expanded Spousal Protected Resource Allowance (SPRA) if their combined monthly incomes are less than $3,090.

They might qualify Arnold for Medicaid, protect Helen’s funds, and stay married – but need to see a Certified Elder Law Attorney to navigate the possible Expanded SPRA and to update their estate planning to protect assets from Medicaid’s estate recovery program. If divorce is the best option, your Certified Elder Law Attorney can prepare legal documents to allow Helen to stay involved in Arnold’s ongoing care, and to protect Helen now that Arnold is too ill to provide care for her.

Paul Premack is a Certified Elder Law Attorney with offices in San Antonio and Seattle, handling Wills and Trusts, Probate, and Business Entity issues. View past legal columns or submit free questions on legal issues via or

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Paul Premack has been a Board Member and has served as President of the Texas Chapter of the National Academy of Elder Law Attorneys (NAELA) and is a Member of the Washington Chapter of NAELA. He is *Certified as an Elder Law Attorney (CELA) by the National Elder Law Foundation as accredited by the Texas Board of Legal Specialization and the ABA. He is licensed to practice law in the States of Texas and Washington and handles Estate Planning and Probate in Texas and Washington, including and Bexar County and King County Probate, Wills, Living Trusts, Durable and Medical Powers of Attorney, and Elder Law. Premack writes the legal column for the San Antonio Express News which is syndicated in other Hearst Newspapers around the USA.

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