Florida Medicaid rules are complex and frequently confusing. For seniors who wish to qualify for Medicaid’s long-term care benefits, they need to meet the strict criteria that revolve around assets and income. Medicaid has very rigid asset criteria and if the applicant has more than $2,000 in assets, the applicant is rejected.
Remember, Medicaid benefits are only for those with little to no income who need help with healthcare. One of the ways to maneuver around some of Medicaid’s rules and gain some level of asset protection is spousal refusal.
To understand the terminology, the non-applicant spouse is usually referred to as the community or healthy spouse and the applicant spouse is referred to as the institutionalized (this is just a term; it doesn’t necessarily mean the person is in an institution) spouse.
In the simplest terms, this means that the healthy partner (often referred to as the community partner) will refuse to pay for the long-term care for the applicant or the institutionalized partner. This does not happen often, but it is a possibility.
This strategy involves the following:
- All the assets owned jointly between the couple are titled over to the community, or the healthy, spouse; and
- The community spouse documents the refusal of making assets available to the applicant on paper and submits it to Medicaid.
On paper, this appears to be a simple strategy, but it is not a process that should be attempted without consulting with an attorney first. Transferring all the assets to the community spouse and refusing to support the applicant can result in litigation by Medicaid. It doesn’t always, but it can.
An In-Depth Look
One of the last strategies for asset protection and to qualify for Medicaid long-term care is spousal refusal. In the simplest terms, this basically means that the non-applicant spouse (community spouse) refuses to pay for the cost of long-term care of the spouse who has applied for Medicaid.
In general, spouses are legally obligated to financially support each other, but if the non-applicant spouse refuses, then Medicaid cannot deny long-term care for the applicant spouse. In addition, the non-applicant spouse has every right to refuse support and retain the assets by not making them available to the applicant spouse.
Spousal refusal is sometimes used as a Medicaid planning strategy when one spouse of a married couple requires Medicaid assistance or long-term nursing care. While this can be a useful strategy, it is not permitted in all states as a means of protecting the assets of the community spouse. As of 2021, only Florida and New York allow this practice.
How Does This Strategy Work?
To better understand Medicaid planning, it is important to be aware that Medicaid has both an asset and income limit for seniors who are applying for long-term nursing care. With Florida Medicaid, the asset limit is $2,000 and the income limit for a married long-term care applicant is $2,468 a month.
When the applicant to the nursing home is married, Medicaid only considers his or her income to determine income eligibility; the community spouse’s income is not factored into the calculation to determine eligibility. On the other hand, the assets are considered jointly owned and calculated differently. This means the names of both spouses will be added to the application to determine the Medicaid asset limit.
However, to ensure that the community spouse will have some asset protection and sufficient income to live on, Medicaid has established the spousal impoverishment rules. These rules allow the community spouse to have a spousal income allowance and a community spouse resource allowance.
On top of that, Medicaid will allow the community spouse to reside in the primary home, have one car, and have expenses for a burial plot. There is a limit on the total amount of assets the community spouse can keep. If the assets are greater than what Medicaid allows, then spousal refusal can be enacted.
With this strategy, all the assets belonging to the community spouse are not counted by Medicaid to determine the eligibility of the applicant spouse.
All the assets that are above the Medicaid applicant’s limit are transferred to the community spouse, which then permits the applicant spouse to meet the eligibility criterion. However, it is important to know the Florida law on asset transfer can run into legal trouble and timing is critical.
You cannot transfer all the assets on the day before you decide to apply for Medicaid assistance. Medicaid does have a look-back period and in most cases will deny the application if the transfer of assets is recent. Hence, it is best to consult with a Medicaid lawyer to know which assets to transfer and when it can be done without triggering a Medicaid penalty.
The community spouse must state in a document that he or she is refusing to pay for the cost of healthcare for the institutionalized spouse. This letter must be dated and submitted to Medicaid. Once the letter is received, the applicant will be considered as a single person and none of the assets belonging to the community spouse will be counted to determine eligibility
The applicant must also submit a form documenting that the community spouse has refused financial support.
Once Medicaid receives the documents acknowledging spousal refusal, the agency may take two approaches: it may support the applicant, or it may refuse and decide to sue the community spouse for the cost of the care of the institutionalized spouse.
When To Consider This Option
Spousal refusal is generally the last resort option. It may be an option when the married couple has significant assets, and the community spouse has a high monthly income. Because the cost of nursing home care is prohibitively high, varying on average from $5K-$7K, this can quickly deplete the savings.
Another scenario where this strategy may be an option is when the couple has limited assets, but the community spouse will not be able to make a living off the spousal allowances permitted by Medicaid.
What are the Legal Implications?
When one of the spouses refuses to contribute towards the healthcare costs of the other applicant spouse, Medicaid can legally file a lawsuit against the community spouse. Even though filing lawsuits against the non-contributing spouse is not common, one has to be prepared to face this scenario. Medicaid is a federal agency and has enormous legal power and can sue the community spouse to recover the costs it has provided to the institutionalized spouse. In most cases, matters are settled way before they go to court.
The community spouse will receive a letter from Medicaid demanding payment for a fixed amount, plus interest. If this happens, the community spouse can either repay the money that is requested or negotiate another amount. A third option is to refuse to pay and face a lawsuit.
In the majority of cases, Medicaid will be willing to set up some type of payment plan with the community spouse. The good news in a case like this would be that the amount of money Medicaid demands will often be much less than what it would cost to reimburse a private nursing home.
The other thing to note is that when there is spousal refusal, the community spouse will not be entitled to a spousal income allowance or the community spouse resource allowance.
Consult with a Professional
Using this strategy to help with asset protection requires knowledge and experience. To determine if this is an appropriate strategy for you and your spouse, it is best to consult with a Medicaid planning professional. It is important to be aware that not all assets are counted towards eligibility for Medicaid benefits.
An experienced lawyer can help determine which of your assets will be used for calculation and which will be exempt from the calculations when determining Medicaid eligibility. In addition, the professional can assist with the documentation, filing, and submission of the application, as well as communicating with Medicaid.
Call Elder Law, P.A. today at 561-588-7512 to speak with a knowledgeable representative.