Written by attorney Joseph Stuart Karp

Florida Nursing Home Medicaid Benefits: Spousal Refusal as a Planning Tool

If you are Floridian whose incapacitated spouse needs long-term nursing care, you undoubtedly want to do everything possible to help your spouse. At the same time, unless you're very wealthy or have good long-term care insurance, the cost of your spouse's care may be threatening to take you broke and destroy whatever quality of life the two of you worked hard to achieve. You don't want that, and chances are your spouse wouldn't want that, either.

You may have heard that Medicaid won't pay a dime if the "community spouse" - the spouse not in the nursing home - has more than $109,560 in countable assets. (That is the figure at this writing, August 2010 - the figure changes periodically.) What is not well known is that Florida is one of the few states that permits a spouse to exercise the right of "spousal refusal." By exercising this right, it may be possible for the community spouse to retain more than $109,560.

Spousal refusal means that the community spouse may decline to use his/her resources to pay for the institutionalized spouse's care. Exercising this right, done in careful coordination with other legal steps, can permit the institutionalized spouse to qualify for Medicaid benefits, and the community spouse to avoid impoverishment and have an amount in excess of $109,560. Below, greatly simplified, are the steps that may be taken to exercise the Spousal Refusal strategy. These steps should never be undertaken without the guidance of a certified elder law attorney. Spousal refusal is a complicated and multifaceted strategy, and an error may result in your losing the very assets you seek to preserve.

Step 1. The institutionalized spouse transfers assets to the community spouse. Transfers between a husband and wife are considered exempt by Florida Medicaid and are not subject to a penalty, even if the transfer takes place during the penalty period.

Step 2. The community spouse signs a statement that he or she refuses to pay for the incapacitated spouse's care.

Step 3. The institutionalized spouse assigns any rights he/she may have against the community spouse, to the State of Florida. This gives the state the legal right to sue the community spouse for monies it has expended on the inacapacitated spouse's nursing care. However, the reality is that Florida has not done so to date, based on a 1995 Florida Supreme Court opinion (Connor v. Southwest Florida Regional Medical Center) that states there is no duty for a person to supply his/her spouse with medical necessities.

When these steps have been completed, Florida Medicaid will disregard the community spouse's resources when determining Medicaid eligibility, and thus, the incapacitated spouse will be eligible for Medicaid benefits.

Make note, however, that there are several other issues that may impact on the efficacy of spousal refusal. All other eligibility requirements and rules must be met, as follows:

  • Gifts made to others( not to the spouse) may still be subject to a lookback period and penalty period. Even if spousal refusal is implemented, Medicaid benefits may be denied, depending on the size and timing of such gifts.
  • The incapacitated spouse must be competent to transfer assets to the community spouse, and to assign claims against the spouse to the state, Or in the alternative, there must be an existing Power of Attorney that authorizes these actions. Without the incapacitated spouse's comptence to do this, or the appropriate existing Power of Attorney, spousal refusal is not possible.
  • Assets must be transferred from the institutionalized spouse to the community spouse before spousal refusal is implemented. Any such transfers taking place after spousal refusal is implemented, may result in denial of Medicaid benefits for a period of time.
  • Another important factor for consideration is the tax impact of asset transfers. For example, if an institutionalized husband cashes in a sizable IRA and transfers it to his wife, the income tax due may outweight whatever Medicaid benefits would have been received. This is an issue that must be discussed with the attorney.

To learn more about spousal refusal and other Medicaid planning techniques, consult a Florida Bar Certified Elder Law Attorney who can help you determine your best options for preserving your hard-earned assets.

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