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By John M. Bigler In the last article I pointed out many changes that took place in the Medicaid program as of September 1, 1994. Fortunately, one thing that was not affected was the planning strategies when a spouse is in need of long-term catastrophic care.
The Federal Medicaid law has a provision that allows unlimited transfers from one spouse to another without a penalty, even when the ill spouse is entering a nursing home. However, the Federal law also imposes restrictions on the amount of assets that the well spouse can have. In New York, a spouse in the community married to a person in an institution is allowed to have $78,820.00 in assets. This is called the resource allowance. The "community spouse" is also entitled to $1,817.00 of income each month. If the community spouse's income is less than that amount, he or she is entitled to take an amount from the income of the institutionalized spouse to bring them up to that level. If they have more than that amount on their own, then the income of the institutionalized spouse would go to the nursing home and Medicaid will also ask the community spouse to make a voluntary contribution of 25 percent of their income over $1,817.00 per month. For example, if a community spouse has $2,017.00 a month in income, Medicaid would ask them to contribute $50.00 a month. The Federal and State law also indicates that spouses are responsible for each other and that any resources above the resource allowance are available to the spouse in the institution. If that were true, it would effectively negate the benefits of unlimited transfers from one spouse to another. However, in New York we use spousal refusal or the "stubborn spouse theory". This is a legitimate strategy under federal and state laws. As an example, John and Mary are a couple in their 70's. Mary seeks counsel of an elder law attorney because John has had a sudden stroke and is hospitalized. The social worker at the hospital advises Mary that John will not be able to come home and will need nursing home care for an unspecified period. The couple owns a home valued at $200,000.00 and has joint bank accounts for $300,000.00. John's income from Social Security Retirement is $1,000.00 a month. Mary's income is $600.00 a month. There is also $800.00 a month in interest income. When's Too Late? Mary has heard that it was too late for her to effectively do Medicaid planning. An elder law attorney will be able to advise Mary that it is not too late to make John eligible for Medicaid. The elder law attorney will probably advise Mary to pay privately for the first three months in the nursing home which is the most the home could ask for. That will help John get into the nursing home more easily. During these first three months, Mary may then transfer all of the assets of the couple into just her name. An application can be made for John for the first day of the fourth month and as part of the application, Mary will sign a spousal refusal letter. John will then be granted Medicaid benefits as of the first day of the fourth month. Mary will be allowed to keep her $600.00 Social Security check, the interest income of $800.00 a month plus $417.00 of John's income. John would keep $50.00 per month and the balance of John's monthly income, $533.00 would go to the nursing home. Once John has been approved for Medicaid, Mary can then consider possibly transferring assets out of her name to the couple's children. A transfer made by Mary prior to John's Medicaid approval, will result in a penalty against John as if he had made the transfer himself. Now that John is on Medicaid, the immediate concern of the monthly nursing home expense is solved. However, Mary is not completely in the clear. She must be concerned as to the consequences if something happens to her. She will need to revise her Will if it leaves everything to John. She will also need to plan so as to avoid a lien on her estate. These and other dangers can be avoided by seeking the advice of an elder care attorney. Reprinted with permission of the Suffolk Times © 1999 [ Contact Us ] [ Guestbook ] [ Email ]  The Law Offices of John M. Bigler, Attorney At Law 1421 Wantagh Avenue, Wantagh, New York 11793-2206 1-888-ELDER-LAW · 516-409-6565 · Fax: 516-409-6522 E-Mail: info@biglerlaw.com · Web Site: www.biglerlaw.com |
New York State has the most liberal laws in the country when it comes to making an application for Medicaid for a spouse who is either in the nursing home or in the community. Every state has a cap on the amount of resources allowed to the spouse of someone who is making an application. However, only New York has a policy of "spousal refusal" which allows the "well spouse" to refuse to contribute any of his or her assets towards the medical care of their spouse. Therefore, theoretically, in New York, the well spouse can keep an unlimited number of assets and still have their spouse become eligible for Medicaid.