In the States of Connecticut, Florida and New York spousal refusal to pay for a spouse’s medical expenses can be an acceptable Medicaid planning technique. The spouse of an individual who goes into a nursing home and applies for Medicaid is referred to as the “community spouse.” This spouse can keep approximately $3000 a month of the family’s combined income. In addition the community spouse can keep about $100,000 in assets which is referred to in Medicaid jargon as “resources.” Exempt assets such as car and the home the parties reside in are not included. The spouse that is going to go into the nursing facility is referred to as the “institutionalized spouse.”
$3000 A Month Is Not Enough
In a situation where the community spouse cannot live on the $3000 a month which is exempt from Medicaid, spousal refusal becomes an important option. The first step is the moving of assets from being held jointly to being solely in the name of the community spouse. An elder care attorney can prepare a document indicating the community spouse is refusing to contribute his or her income and assets to the care of the institutionalized spouse. The document provides reasons for the community spouse needing more than $3000 a month to live on. If the community spouse exercises spousal refusal and then meets other requirements to qualify for Medicaid benefits, the New York State benefit program must pay the expenses for the institutionalized spouse.
Department of Social Services Suing Community Spouse
The Department of Social Services can institute a law suit against the community spouse to recover all of the expenses paid by Medicaid. The purpose of the law suit is to force the community spouse to reimburse the Department of Social Services. So why should a community spouse risk this law suit? There are good reasons for this. To start with there is no guarantee the Department of Social Services will be successful in the law suit. Even if the Department of Social Services is winning the law suit, these law suits are often settled for less than the entire amount which is due and owing. In the event the Department of Social Services is successful in the law suit, it may only obtain payment for the Medicaid reimbursement rate and not for the much higher private pay rate the institution would charge for taking care of the institutionalized spouse. The private pay rate is usually $3000 to $5000 a month higher than the reimbursement rate for Medicaid.
Elder Care Planning: The Best Route
The first option should be to purchase long term care insurance. If this is not a viable option, the next best way to deal with elder care related issues concerning Medicaid is to hire an elder care lawyer to prepare an irrevocable MAPT trust at least five years before any potential need for Medicaid benefits.