Spousal refusal is a strategy used to qualify an ill spouse for chronic Medicaid benefits where the other spouse is in relatively good health.
Podcast Transcription:
WRVO Producer Mark Lavonier:
This podcast is part of the series Estate Planning Pro Tips, hosted by attorney Tim Crisafulli of Crisafulli Estate Planning and Elder Law P.C., an estate planning, probate and elder law firm serving clients throughout central New York. A former school teacher, Tim explains complex legal subjects in an easy-to-understand way. The commentaries focus on the central aspects of estate planning, such as wills, trusts, asset protection, long-term care, and probate. And now here's Tim.
Tim Crisafulli:
Spousal refusal is a strategy used to qualify an ill spouse for chronic Medicaid benefits, where the other spouse is in relatively good health. This comes up where you have a married couple, they did not have the chance to complete their planning five years in advance, and they learned that one of the two spouses needs a nursing home.
The first step is to determine which of the couple's assets constitute available resources under New York's Medicaid rules. Available resources are assets that must be spent down to privately pay for a nursing home patient's care before chronic Medicaid benefits become available.
Second, most, if not all, of the available resources are transferred from the sick spouse to the healthy one.
Third, the sick spouse submits a chronic Medicaid application that indicates that the healthy spouse refuses to contribute to the sick spouse's care. With that, the sick spouse qualifies for chronic Medicaid benefits. This strategy can be helpful to a married couple as a way to protect assets, even where planning was not done five years in advance, where one spouse needs long-term care and the other is healthy.
Before you conclude – “Well, that sounds simple enough,” – there is a catch. Indeed, there are multiple catches.
First, the county retains the right to pursue the refusing spouse in litigation, if necessary, to contribute to the sick spouse's cost of care. But even if the county chooses to do so, the refusing spouse is still better off financially because the refusing spouse is pursued for the Medicaid rate that the nursing home gets paid, rather than the private pay rate. For example, if the private pay rate for a month's nursing home care is $17,000, and if the county pursues the refusing spouse for a contribution, the refusing spouse would be pursued for a much lower amount than the $17,000 sticker price.
The second catch is that if the refusing spouse subsequently becomes ill and needs long-term care, this strategy does nothing to protect assets. Stated differently, using spousal refusal may have helped preserve assets when the first spouse needed a nursing home, but it without additional planning, protects nothing if the once healthy spouse subsequently needs a nursing home.
