One spouse’s financial security shouldn’t be threatened because the other spouse needs nursing home care. Unfortunately, Medicaid’s rules generally require the income and assets of both spouses to be considered when determining either spouse’s eligibility for benefits. This can leave couples worried that the healthy spouse will have to spend everything they have just so the other can receive the assistance they need.
However, New York recognizes an option known as spousal refusal. This permits the spouse who will remain living in the community (called the “community spouse”) to decline to make their income and resources available to pay for the other’s care.
How spousal refusal works
When the ill spouse applies for Medicaid, the community spouse files a written statement saying that they refuse to use their income and resources for the spouse’s care with the New York Department of Health. This is authorized under Social Services Law (SSL) § 366(3)(a). Medicaid must then evaluate the applicant spouse’s eligibility using only their own income and assets.
It’s important to note, of course, that the applicant spouse must still meet Medicaid’s income and resource limitations independently to qualify for aid. In addition, the state may still pursue the community spouse (or their estate) for some portion of the care, but they must generally seek the lower Medicaid rate that was paid to the care facility, not the higher private pay amount. However, the community spouse must usually be left with adequate resources to maintain their standard of living and the amount due to the state can often be negotiated downward.
Spousal refusal may be particularly useful when the community spouse needs substantial resources to pay for their own housing, medical care and other living expenses. This strategy must also be coordinated carefully with asset transfers, trusts, beneficiary designations and the Medicaid lookback period.
Moving money without understanding the rules could be disastrous and ultimately delay eligibility or create a penalty period for an ill spouse. Because of that, spouses interested in Medicaid planning could benefit from speaking with a New York elder law attorney who can examine their financial situation, explain the options, discuss the consequences of different paths and help them address their needs.