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Medicaid in Illinois: Protection of the Healthy Spouse's Assets and Income | Community Spouse Resource Allowance

Article written by Illinois & Iowa Attorney Kevin O'Flaherty
Updated on
November 1, 2019

Most people are aware that in order to apply for Medicaid for long-term care you are required to spend down the majority of your own assets.  In Illinois, in order to be eligible for Medicaid assistance, the recipient must have less than $2,000.00 in non-exempt assets.  But what happens when the Medicaid recipient has a healthy spouse?  States have recognized that, due to the financial burden of long-term care, there should be a mechanism for one spouse to receive Medicaid benefits while the other spouse (called a "community spouse") retains enough income and assets to live on.  This is the purpose for the "community spouse resource allowance" in Illinois. 

Illinois Medicaid Asset Requirements

Assets held in your spouse's name generally count as your assets for the purpose of applying for Medicaid.  However, In 2016 in Illinois, while the Medicaid applicant or recipient must have less than $2,000.00 in assets, the Medicaid recipient's spouse is allowed to keep $119,220.00 in countable (or non-exempt) assets.  This is called the "community spouse resource allowance."  The Medicaid recipient and community spouse are permitted to retain certain exempt assets in addition to the  community spouse resource allowance.  Exempt assets include:

  • Up to $525,000.00 of equity in the home;
  • Household goods including furniture and appliances; 
  • The Medicaid applicant and his or her spouse can each designate $10,000.00 for burial expenses;
  • Burial plots for the Medicaid applicant and immediate family.  
  • One Automobile (up to $4,500.00 in equity); 
  • Life estate interests in real estate;
  • Personal items such as clothing or jewelry; and 
  • Assets that are not able to be sold despite a good faith effort by the applicant. 

In addition, the community spouse is permitted to maintain an income of up to $2,739.00 per month without negatively affecting Medicaid benefits.  If the community spouse is making less than this amount in income, then the Medicaid applicant may count some or all of his or her income (such as Social Security payments) as that of the community spouse.  

Unlike transfers to other family members or loved ones which are limited by the 5 year look-back period, transfers can be made from the Medicaid applicant to the community spouse at any time without negatively impacting Medicaid benefits.   

After the Medicaid recipient passes, the state government can seek seek to be repaid Medicaid's expenses for his or her long-term care from the Medicaid recipient's estate.  However, collection on this debt cannot move forward while the community spouse is living.  In the case where the community spouse outlives the Medicaid recipient, collection of Medicaid expenditures will be sought from the estate of the community spouse to the extent that the estate contains assets that were owned by the Medicaid recipient at his or her death (like a jointly owned home).  

Although the state may place a lien on the home of the community spouse if it falls into this category, the community spouse can freely transfer, sell, or give away any of her property during her lifetime.  Good Medicaid planning will ensure that all assets are transferred to the community spouse prior to the death of the Medicaid recipient in order to allow those assets to pass from the community spouse to the community spouse's heirs without the interference of state Medicaid recovery.  

Additional Financial Considerations
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From Financial Experts

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Illinois medicaid planning explained

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