Spousal refusal is a legal strategy that protects a married couple’s assets from the impact of one partner’s long-term care needs. It allows the non-applicant spouse to refuse that his or her income be considered when determining Medicaid eligibility for long-term care coverage. This prevents the institutionalized spouse from being able to spend down their combined assets to qualify for long-term care and becoming impoverished in the process.
The law governing this option is state-specific, and only three states, including New York, currently allow spousal refusal to help preserve the community spouse’s assets. The community spouse must formally sign a statement of refusal, and the Medicaid agency will then determine the applicant’s eligibility based solely on that person’s income and assets, as though the legally responsible spouse does not exist.
However, even when the community spouse submits a statement of refusal, the county may still sue them to recover costs for the nursing home stay incurred by the applicant spouse. It is important that a senior who wishes to take advantage of this option work with an experienced elder care attorney to review all the options available for preserving his or her assets and income.
In some cases, a county will settle for less than the full amount claimed, which can be beneficial to the community spouse. However, the elder law attorney can also assist with preparing an irrevocable Medicaid trust, which offers all the benefits of spousal refusal without the possibility of a lawsuit or lien to recover care expenses.
The ability to use spousal refusal can save a married couple substantial amounts of money. It can also prevent the community spouse from having to spend their savings to pay for the care of their ill spouse and being forced to move into a retirement community or assisted living facility. In addition to reducing the cost of care, this strategy can allow the couple to remain in the same house for a longer period of time, which is an important benefit to the quality of life.
If you are interested in learning more about spousal refusal and how it can be used to protect your assets, contact our firm. We are a trusted source of elder care planning advice for individuals and families in New York.
Spousal Refusal is a Medicaid law that can help protect a spouse of an elderly person from being impoverished by the asset and income limits imposed on their partner’s eligibility for long-term care benefits. This is a very powerful tool for married couples, but it must be used correctly to avoid problems and potential consequences.
When a married person needs institutional long-term care (MLTC) because of a disabling condition, a major problem can arise in trying to qualify for Medicaid benefits when the couple’s assets exceed the statutory limit. When this occurs, the non-applicant spouse may consider executing a Spousal Refusal letter. This document allows the community spouse to voluntarily turn over his or her income and assets to the state so that the MLTC applicant’s need for benefits is calculated based on just that person’s needs and not the couple’s combined resources.
However, before considering spousal refusal, it is important to consult an experienced elder care attorney in New York to discuss the matter in greater detail. Local Departments of Social Services vary widely in their approach to spousal refusal, with some aggressively pursuing the recovery of benefits paid by Medicaid for care received by the community spouse while others take a more cautious and measured approach.
To execute a Spousal Refusal, the community spouse must complete a written statement that absolves him or her of any responsibility for supporting the institutionalized spouse and states that he or she is refusing to contribute his or her income to his or her spouse’s MLTC costs. Any assets that exceed the individual MLTC Medicaid asset level must be transferred to the community spouse prior to submitting the Spousal Refusal letter.
In addition to the above, the MLTC applicant must also sign a document stating that he or she is relinquishing all rights to spousal support. Finally, the MLTC applicant must submit a current affidavit of income to show that his or her income is sufficient to pay for the cost of his or her care.
Although the county retains the right to sue the community spouse for reimbursement of benefits paid for a spousal’s care, this is often avoided or settled for significantly less than what would be recovered through a lawsuit. For these reasons, a well-versed elder care attorney specializing in Medicaid planning strategies such as spousal refusal should be considered by all community spouses who are concerned about the impact of their care on the financial health of their family.
Spousal refusal allows a non-applicant spouse of a Medicaid long-term care applicant to refuse to contribute to their spouse’s cost of care. Although spouses are legally obligated to support each other, New York law allows non-applicant spouses the legal right to refuse to make their assets and income available for the benefit of their spouse who is receiving long-term care.
This asset preservation strategy can help preserve some of a community spouse’s assets and protect them from the high costs of long-term care. However, it is important to consider the risks involved in a spousal refusal before recommending this strategy to clients.
The first risk of spousal refusal is that it may trigger a transfer penalty, which is a period of time during which an individual cannot qualify for Medicaid benefits. This is because the Medicaid program conducts a lookback period of five years, during which it examines all financial transactions and determines if any are deemed to be inappropriate or in violation of its rules. Spousal refusal may trigger this penalty if the well spouse transferred assets to the community spouse prior to filing for MLTC.
Fortunately, since the passage of health reform, the federal government has mandated that all waiver programs nationally must include spousal impoverishment protections. These spousal protections ensure that even if the community spouse transfers some of their assets, it will not negatively impact the ill spouse’s eligibility for Medicaid long-term care benefits.
Another risk of spousal refusal is that the county Medicaid agency may pursue a lawsuit to recover the cost of care from the community spouse, which could require a significant financial settlement. The good news is that many counties now exercise discretion and refuse to initiate recovery action or settle for less than the full cost of care, which can save the community spouse a lot of money and stress.
If you or your loved one are considering spousal refusal as part of an estate planning strategy, it is important to discuss this with an experienced elder law attorney. An attorney can advise you of your legal options and help you implement a plan that meets your specific needs.
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