December 1, 2015
This edition of the Koldin Report E-Newsletter reviews the use of a Spousal Refusal as a method to protect the income and life savings of the at-home spouse (Community Spouse) when the ill spouse is in a nursing home and applying for Medicaid coverage. All previous newsletters can be found on our website by clicking here .
What Is Spousal Refusal?
When one spouse enters a nursing home, the Community Spouse is generally allowed to keep one-half of the couple’s combined savings with a minimum of $74,820 up to a maximum of $119,220 and $2,980.50 of the couple’s combined income (2015 figures). The same rules apply regardless of which spouse is the ill spouse or community spouse.
Medicaid Spousal Refusal in NY
If the Community Spouse has savings above these figures, he/she must spend his/her life savings down to the allowance level before his/her spouse will be eligible to receive Medicaid. If his/her own income is above the income allowance, he/she will be requested to contribute 25% of his/her excess income towards his/her spouse’s cost of care.
There are many options for protecting your life savings even after one spouse is already in a nursing home. Some available asset protection options are discussed on our website page in here. One such option is the “Spousal Refusal.”
If the Community Spouse discloses all of his/her savings and income, but refuses to spend his/her life savings or contribute his/her income, the Medicaid Agency is required by law to treat the ill spouse as a single person and determine his/her eligibility as if he/she did not have a spouse. A spousal refusal is sometimes referred to as the “Just Say No” option.
Although the Medicaid Agency must honor the spousal refusal for determining eligibility of the ill spouse, the Medicaid Agency can then sue the Community Spouse to force him/her to contribute to the cost of care of the ill spouse.
Upon receiving a spousal refusal, the Medicaid Agency typically will respond in one of the following ways:
- Approve eligibility for the ill spouse and take no further action.
- Approve eligibility for the ill spouse, but then file a Court action against the Community Spouse to force contribution towards the ill spouse’s cost of care. Typically, before filing such a Court action, the Medicaid Agency will send the Community Spouse a “demand letter” itemizing the expenses paid by the County Medicaid Agency and demanding that the Community Spouse reimburse the County. Upon receiving such a “demand letter”, the Community Spouse will need to respond to this letter by either agreeing to reimburse the County, by negotiating a settlement, or by litigating (defending a recovery action by the County).
- Approve eligibility for the ill spouse. However, after the death of the Community Spouse, Medicaid may then file a recovery action against the estate of the Community Spouse. Any future estate planning by the Community Spouse such as gifts to children or to a Trust could become subject to a recovery action by Medicaid.
Elder Law Attorney Assistance With A Spousal Refusal
Clients often ask what the likelihood is that the Medicaid Agency will pursue a recovery against the Community Spouse who submits a spousal refusal. There is no set standard and it varies among each county. Some counties are very aggressive in seeking recovery while other counties are more selective in which cases to pursue a recovery.
Once the County decides to pursue a spousal refusal recovery, the first step is typically to attempt to negotiate a settlement with the county based on the circumstances of the Community Spouse. If a settlement cannot be negotiated, then the Court would review the circumstances of the Community Spouse to determine if a recovery by the Medicaid Agency is appropriate.
As an example, one of our clients submitted a spousal refusal when the husband was in a nursing home and the wife was in assisted living. The wife needed all of her income and savings to be able to afford to continue to pay for the cost of assisted living so she submitted a spousal refusal. Thus far, the Medicaid Agency has elected not to pursue a recovery against the wife.
In another case the husband was in a nursing home and the wife owned a boat that raised her total resources higher than the spousal resource allowance. She could not make her husband eligible for Medicaid for so long as she owned the boat and she did not have enough savings other than the boat to be able to afford the husband’s nursing home bills. The wife submitted a spousal refusal and obtained immediate Medicaid eligibility for her husband. The Medicaid Agency then pursued a recovery action against the wife who negotiated a settlement agreeing to list the boat for sale and reimburse Medicaid from the proceeds of sale.
In a further case, our client was a younger spouse with children who were still in college. She submitted a spousal refusal and then settled with the Medicaid Agency to pursue employment and then contribute towards her husband’s care from a portion of her salary. Until she became employed, she was allowed to keep all of her income and savings so that she could support her children.
One significant advantage of a spousal refusal even if there is a subsequent recovery action by the Medicaid Agency is that the Medicaid rate paid to the nursing home is often much lower than the private pay rate. By using the spousal refusal, the cost of nursing home care can be reduced substantially.
Get Help With A Spousal Refusal From An Elder Law Attorney in Syracuse, NY ., NY
At the Koldin Law Center, P.C. with offices in Syracuse , New York, we have over 50 years of experience helping individuals deal with immediate crisis asset preservation options even when you are already in a Nursing Home. Our attorneys are available to discuss your legal rights including whether the spousal refusal option is the best asset protection option compared to other options that may be available. Contact us for a free consultation.