(CBS) From the time banker Ken Walker said, "I do" to his bride, Barbara, he started saving.

"I diligently put money into my 401K," he says.

Then, 20 years ago, Barbara Walker developed a rare brain cancer. But she was determined to return to teaching and continued to work for the next two decades.

"They don't make them stronger," says Walker about his wife.

Eventually her condition worsened, and they both retired. Ken was only 52.

"I retired to take care of Barbara," he says.

But, as CBS News Correspondent Vince Gonzales reports, now she needs 24-hour home care nursing.

To pay the $6,000 monthly bill, Walker sold off their stocks and life insurance policies - everything but their home and his pension. Eventually the money ran out, and he was forced to apply for Medicaid. That's when he learned the state wanted him to sell off his IRA, too.

"I was surprised," he says.

Colorado is one of 20 states that now claim at least part of the IRAs and other pensions of healthy, retired spouses, like Ken, before giving up any Medicaid dollars. It's a new concern for America's 77 million baby boomers who were told to invest in IRAs and 401Ks that would see them through old age.

Critics say Colorado's law, and others like it, discourage savings and scare people away from retiring and are anti-marriage because only spouses are penalized.

Ken Walker says he even considered getting a divorce, but he couldn't.

"That's for some people but that's not for Ken Walker," he says.

Instead, he had to liquidate his 401K. Colorado left $95,000 in his IRA for him to live on for the rest of his life.

"If I have to live under a bridge after Barbara's gone, then I'll have to deal with that," he says.

"So maybe he needs to go back to work," says state Medicaid director Vivianne Chaumont. "Maybe he needs to make some adjustment to his life plan."

That may sound cold, but Chaumont says the Medicaid system, which was set up for the needy, is being overwhelmed.

"It is getting to be more and more a program for middle class, and as expenses go up, even higher than that," she says. "So let's recognize that, let's recognize it and build a program in a way that takes care of that in an honest fashion."

For spouses like Ken Walker, whose retirement funds have been gutted, she is sorry.

"It doesn't work for a lot of people," she says. "I think that's true. I think that's sad."

But several courts have said Medicaid officials can dip into healthy spouses' retirement savings, so expect more states to adopt laws like Colorado's.

© MMV, CBS Broadcasting Inc. All Rights Reserved.

Back To Top