Attorney Tom Olsen is host of the Olsen on Law Radio Show on in Orlando. Tom has been answering legal questions on his radio show for over 35 years and has been practicing law in Orlando for 40 years.
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Spousal Refusal, which has been dubbed, “just say no,” is when a non-applicant spouse of a long-term care Medicaid applicant refuses to help pay the cost of long-term care for their spouse. While spouses are legally obligated to financially support one another, Medicaid cannot legally deny care if a non-applicant spouse refuses to contribute towards the cost of care of their spouse. Furthermore, Spousal Refusal law asserts that non-applicant spouses are entitled to retain their assets by refusing to make them available to their applicant spouse.

This Medicaid planning strategy can be used when one spouse of a married couple requires Nursing Home Medicaid, or in some cases, Medicaid long-term Home and Community Based Services (HCBS) via a Waiver. Non-applicant spouses are often called healthy spouses or community spouses and applicant spouses are frequently called institutionalized spouses. Don’t let the term, “institutionalized”, confuse you. While the “institutionalized” spouse might reside in a nursing home, that spouse could just as likely receive long-term care services in the home or community, such as in assisted living.

Spousal Refusal, although it is a federal Medicaid law, is not currently utilized in all states as a means to protect assets for non-applicant spouses of long-term care Medicaid applicants. The only three states in which it is generally practiced are Florida, New York, and Ohio.

Transcript:

Speaker 1: Robert you touched on spousal refusal, one of those tools, but tell our listeners about spousal refusal.
Attorney Robert Hidock: What a spousal refusal is, is when you’re married, a married couple, and one of you is applying for Medicaid and let’s say they’re going into a skilled nursing facility. As a married couple they are allowed to have $150,620 in countable assets, not their house, not their IRA, but if they well over that number what we do is the spouse that’s home, Medicaid will call them the community spouse, all the assets go to the community spouse’s name because Florida allows for interest spousal transfers. Once that’s been aligned accordingly, the community spouse will write a letter for her basically saying, “I love my husband, but I’m refusing to make my assets available for his care.”
Then the person in the nursing home, usually via the power of the attorney, assigns the right to recover his assets from the State of Florida, State of Florida has the policy that it will not recover from a spouse. Client goes on Medicaid, spouse at home gets to retain all assets and even if she does the spousal refusal, she is still entailed to an income distribution from the spouse that’s going into the nursing home.
[00:01:27] [END OF AUDIO]…(read more)

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What is ‘Spousal Refusal’ in Nursing Home Planning?

Making decisions about nursing home care for yourself or a loved one can be overwhelming and emotionally challenging. Among the many concerns people face is the financial burden that comes with long-term care facilities. Nursing home expenses can quickly drain savings and put significant strain on a family’s financial resources.

However, Medicaid is a government program that provides some financial relief for those who need nursing home care but cannot afford it. Medicaid eligibility, however, is subject to strict income and asset limits. In order to qualify for Medicaid, applicants must demonstrate that they have limited assets and income levels.

Here is where the concept of ‘spousal refusal’ comes into play. Spousal refusal is a legal strategy that some couples use to protect assets and income when one spouse requires nursing home care and wants to qualify for Medicaid benefits.

Essentially, spousal refusal is a way for the healthy spouse to disclaim any legal responsibility for paying for the care of their partner. By employing this strategy, the income and assets of the refusing spouse are not considered when determining the financial eligibility of the spouse in need of nursing home care.

How does spousal refusal work in practice? When a couple applies for Medicaid, a look-back period of five years is in place. During this period, the government reviews any assets transferred or given away by the couple. If assets were improperly transferred, the government imposes a penalty period delaying Medicaid eligibility.

To legally execute spousal refusal, the refusing spouse must demonstrate that they have legal rights to the assets or income. They should provide evidence that the assets or income are not available to them or under their control. This proof is typically achieved through a legally valid disclaimer that explicitly states that the spouse is refusing to use their assets or income for the purposes of paying for nursing home care.

However, it is important to note that spousal refusal is not allowed in all states. Each state has its own Medicaid laws, and some states do not recognize this strategy or may have restrictions on its use. Therefore, consulting with an experienced elder law attorney familiar with the laws of the specific state is essential when considering spousal refusal as a nursing home planning tool.

It is also crucial to understand that spousal refusal does not automatically guarantee Medicaid eligibility. The spouse requiring nursing home care still needs to meet other Medicaid requirements relating to their own income and assets. Additionally, the refusal to provide support may have other legal implications on the relationship and overall financial planning, so careful consideration is necessary.

While spousal refusal may offer a potential solution for protecting assets in nursing home planning, it is not a one-size-fits-all strategy. It is crucial to consider individual circumstances, legal implications, and the specific guidelines of the state in which one resides. Seeking professional advice will help navigate the complexities of Medicaid eligibility and ensure appropriate financial planning for nursing home care needs.