Married couples are in a separate category when it comes to Medicaid benefits in New York. First, a couple is treated as a single unit; even though only one spouse may be applying for benefits, all information regarding both spouses must be disclosed to the Medicaid agency, including all asset and financial information. Second, spouses may freely transfer assets between themselves without consequence, even if within the look-back period; all asset transfers between spouses are exempt and therefore no penalty periods will be assessed. A married couple is also afforded special income and asset allowances. It’s important to understand these rules if they apply to you and to plan accordingly if they do not.
Married couples are afforded great leniency under New York’s Medicaid laws. A couple can transfer any amount of money or property from one spouse to the other without incurring a Medicaid penalty. For example, if a husband falls ill, the couple can transfer all assets to the wife’s name and the husband will be eligible for Medicaid benefits immediately. There is no penalty or waiting period. This applies to both Medicaid nursing home benefits and home care benefits.
Under New York’s Medicaid laws, spouses are protected by a special exemption that allows them to transfer money from one spouse to the other without incurring any penalty or waiting period whatsoever.
Many people confuse the Medicaid look-back period with the Medicaid penalty period. The look-back means that an individual or married couple must provide documentation to the Medicaid agency regarding their finances for the past five years. While a married couple must provide this information to the Medicaid agency in order for the applicant to be eligible for benefits, there will be no “penalty period” or period of ineligibility for the spousal applicant.
The spouse who is not the applicant for Medicaid benefits (the “community spouse”) is entitled to keep an income allowance each month. If the husband is the applicant and the wife’s income is less than the allowance, when her husband enters the nursing home, she is entitled to keep a portion of her husband’s monthly income to bring her up to a total permitted monthly income allowance. Further, she is entitled to keep assets up to a resource limit prescribed by the state. If, after transferring all of the married couple’s assets to her name, the wife in our example has more than the permissible amount in assets, she can sign a “spousal refusal.” This is simply a statement by the community spouse that he or she is not making assets available for the other spouse’s care. Based upon that statement, the wife in our example can keep more than the resource allowance and her husband will still receive Medicaid benefits. The catch is that the Medicaid agency then has the right to initiate a lawsuit against the wife for monies expended on her husband’s behalf.
Under New York law, spouses have a legal duty to support each other. Until the Medicare Catastrophic Coverage Act of 1988 (“MCCA”) was adopted, and many well (i.e., healthy) “Community” spouses became impoverished as a result of the astronomical costs of long-term care for their ill spouse. The MCCA legislated that the ill spouse can freely transfer his or her assets to the community spouse and be eligible for Medicaid benefits immediately. If after making those transfers, the community spouse has assets above the resource allowance prescribed by the state, the community spouse can sign “spousal refusal,” whereby the well spouse refuses financial responsibility, leaving Medicaid to pay for the care. In this way, community spouses need not become penniless paying for an ailing partner’s care and do not have to divorce their spouse to avoid impoverishment.
To secure Medicaid eligibility, married couples transfer assets from the Medicaid applicant’s spouse to the community spouse. There are no restrictions or penalty periods imposed on transfers of assets between spouses. For example, a Medicaid applicant with $750,000 in assets may transfer the whole amount to his spouse on day 1 and be eligible for Medicaid benefits on day 2.
The downside is that the local Departments of Social Services retain the right to sue the community spouse for the cost of the care paid for by the Medicaid program. Because local departments have different approaches to spouses who execute a spousal refusal, varying from aggressive pursuit of recovery of benefits, including the commencement of legal action to sporadic or non-existent recovery efforts, it is critical for people to consult with an experienced elder law attorney regarding their options and risks. When faced with the prospect of impoverishment and essential long-term care, many community spouses choose spousal refusal with the understanding that, at some point, the local department may seek reimbursement for monies expended under the Medicaid program on behalf of their spouse. Because Medicaid is only permitted to seek reimbursement at the Medicaid rate (versus the private pay rate), it is less expensive for your spouse to continue to receive long-term health care via Medicaid rather than for you to pay out of pocket for such care, even if such a lawsuit is pursued.
There are several tools available for dealing with spousal refusal lawsuits, which may enable the well spouse to negotiate the Medicaid lien. It is important to seek representation with the experienced litigators at Cona Elder Law who specifically handle spousal refusal litigation if recovery is sought.
All transfers between spouses are exempt. This means that if one spouse becomes ill, he or she can transfer all assets to the well spouse and be eligible for Medicaid benefits immediately. This includes the spouse’s interest in the family home.
We effectively implement strategies to protect our clients’ interests and help guide them through the Medicaid planning process. If you’re a married couple looking for advice and legal guidance on any type of Elder Law matter, contact the experienced and trusted attorneys at Cona Elder Law today.
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PLAN NOW: NEW MEDICAID HOME CARE LOOK BACK RULES TAKE EFFECT 10/1/22