The Medicaid planning strategy of spousal refusal is one way for spouses to protect their assets from the cost of long-term care in the event they find themselves on the nursing home doorstep. However, it is not appropriate in every situation.
Spousal Refusal is a legal strategy wherein the non-applicant spouse, often referred to as the “community spouse”, formally refuses to contribute his or her income and assets to the cost of care for their institutionalized spouse. This step must be taken prior to applying for Medicaid and must be in writing. When this is done, the office of Medicaid must then calculate the applicant’s eligibility based solely on that individual’s income and assets. The community spouse will be allowed to keep his or her own assets, but they will not be able to receive a spousal income or Community Spouse Resource Allowance.
While spousal refusal may appear to be a risky strategy, it can be an excellent choice for couples who have significant assets but find themselves in need of long-term care and are facing the high costs associated with privately paying for that care. The good news is that, in our experience, the county will not file a lawsuit to recover the cost of care, and if it does, it can be settled for much less than the private rate for care.
A qualified elder law attorney can assist in determining whether or not Spousal Refusal is the right plan for your specific situation. They can assist with calculating the amount of your exempt assets, determining the amount in which you will be able to spend down excess assets without violating Medicaid’s Look-Back rule, and help you weigh your options if it does not seem like Spousal Refusal is financially the best option for you.
The cost of long-term care is one of the biggest concerns for many seniors and their families. The government program Medicaid can help pay for some of this expense, but the process to qualify is complex. Spousal refusal is one strategy that some couples use to protect their assets while still qualifying for Medicaid. It involves one spousal refusal to contribute to their loved ones’ long-term care costs, which can reduce the couple’s combined income and assets and make them eligible for Medicaid benefits. However, there are a number of risks associated with spousal refusal that you should be aware of.
One risk of spousal refusal is that it could trigger a transfer penalty. This is a period of time during which Medicaid examines all financial transactions that an applicant or their spouse made in the previous five years to determine if any of these transfers were made for less than fair market value and thus resulted in a penalty for the person seeking benefits.
Another risk of spousal refusal is that it can lead to legal disputes between the spouses. It is important that couples have open and honest conversations about their finances and the possible need for long-term care so they can come up with a plan that works best for them.
Fortunately, there are other strategies that seniors and their families can use to protect their assets while also qualifying for Medicaid. In the next article, we will explore these alternatives to spousal refusal, including Medicaid asset protection trusts and long-term care insurance policies.
Spousal Refusal is a legal strategy that allows the non-applicant spouse to transfer assets that exceed Medicaid eligibility limits. This strategy is useful when the applicant spouse requires nursing home or community home care services. It works by turning over the responsibility for paying the applicant spouse’s bills to the state. The state will then sue the non-applicant spouse to recover the costs of care.
Unfortunately, this strategy can be abused by unscrupulous individuals. In some cases, the ill spouse transfers their entire estate to a sibling or other family member before applying for Medicaid. Then, they will invoke spousal refusal to avoid being forced to pay for their care. The state has begun to investigate such cases and is suing the spouses who have used this tactic.
Generally, New York law recognizes that a married couple has an obligation to provide financial support to each other. However, the state may not deny benefits or halt the application process because the well or “community” spouse refuses to contribute to the cost of care for the ill spouse. Instead, the ill spouse can be required to spend down their assets in order to qualify for Medicaid.
By utilizing a legal document called a Spousal Refusal letter, the community spouse can prevent this from happening. This strategy allows the Medicaid application to proceed and protects the community spouse’s assets from being claimed by the ill spouse. Unlike other asset preservation strategies such as promissory note planning, annuities, or purchasing exempt items, a Spousal Refusal does not expose the community spouse to potential lawsuits from the Medicaid agency in the event the Medicaid claim is denied.
This strategy can be used with either a Nursing Home or HCBS Waiver Medicaid application. It is important to keep in mind that spousal refusal does not apply to Regular Medicaid, also known as Aged, Blind and Disabled (ABD).
Spousal Refusal is merely one of many strategies an experienced Elder Law attorney can employ to help their clients preserve their assets and qualify for long term care benefits. Each client should be evaluated individually to determine whether or not this strategy is the best fit for their situation. The experienced attorneys can assist with this evaluation as well as with a variety of other planning strategies including a pooled trust, spend-down options, funeral trusts, and more. To learn more, click the link to read our full article, A Closer Look at Spousal Refusal in New York. Or contact us for a complimentary consultation. We serve clients throughout New York. We look forward to hearing from you.
Schlessel Law PLLC | Long Island Elder Law Attorney
34 Willis Ave Suite 300, Mineola, NY 11501, United States
(516) 574-9630