Nursing Home Crisis Strategies — Spousal Refusal
When dealing with Nursing Home budgeting, Medicaid income and asset rules are strict. Because the cost of care is very high, most average Americans run out of money and Medicaid then pays for that necessary care. The “institutionalized individual” is allowed to keep just $50 per month plus $30,182 in savings. Generally, the “community spouse” may keep $3,853 per month of the couple’s combined income and $154,140 of the assets or “resources” over and above the exempt assets, such as a home, one automobile and prepaid burial accounts with a funeral home.
Many times, a spouse simply cannot afford to live securely on the allowances that Medicaid provides. This is where spousal refusal comes in. We start by shifting excess assets into the name of the community spouse. He or she then signs a document which the elder law attorney prepares and files with the Department of Social Services (DSS) indicating that they refuse to contribute their assets to the care of the ill spouse since they need those savings for their own care and well-being.
Once the community spouse invokes their right to refuse, and all of the other myriad of requirements of the Medicaid application are met, the state Medicaid program must pay for the care of the institutionalized spouse. Sounds good, but you are not “home free” yet. After Medicaid has been granted, even after the institutionalized spouse has died, DSS may sue the community spouse trying to recover the cost of care DSS actually paid out.
If so what’s the point? Each case is unique. There are a few reasons why spousal refusal may make sense, even in light of this risk. First, in many instances, DSS never seriously pursues this right of recovery. Second, the community spouse may have spent the excess on her own needs in the interim. Third, these lawsuits may be settled for significantly less than the cost of care provided. Fourth, the county may be willing to defer repayment until after the community spouse dies or sells her home. Finally, even though the county may seek recovery, it is only for the Medicaid reimbursement rate and not the private pay rate. For example, if the private pay rate is $16,000 per month, which is what you would have to pay, the amount Medicaid actually paid may be thousands of dollars less than the private pay rate. The county may only pursue you for the amount they actually paid. Worst case scenario then, if you had to repay the full amount DSS paid for care, you would still be saving several thousand per month times the number of months DSS paid for the cost of the spouse’s care. Saying “I refuse to contributed toward the cost of care” is a simple statement which may be part of a more sophisticated crisis planning strategy.
Far better however, is to plan ahead and consider asset protection and possibly setting up a Medicaid Asset Protection Trust (MAPT) five or more years ahead of the nursing home crisis. Schedule a consultation to talk about your planning needs.
Law Office of Kathleen M. Toombs
157 Barrett Street, Schenectady, NY 12305
Law Office of Kathleen M. Toombs, PLLC
157 Barrett Street
Schenectady, NY 12305
P: (518) 688-2846
F: (518) 688-2849