Question: “We have heard that Medicaid won’t pay a dime if the “community spouse” – the spouse not in the nursing home – has more than a certain amount of countable assets. (A number that changes periodically.) However, we are now hearing about something called “spousal refusal,” whereby the community spouse can retain all of his or her assets by simply refusing to pay the nursing home bills of the institutionalized spouse. Can you tell us about this? My parents live in Connecticut.”
Answer: Often, a Medicaid applicant needing nursing home care will have a spouse who is able to continue living at home in the community (“Community Spouse”). There are strict income and asset guidelines regarding Medicaid eligibility when there is a community spouse. These guidelines prevent couples with significant assets from making one spouse eligible for Medicaid. However, federal Medicaid law has been interpreted to create an opportunity for the Community Spouse to keep all of his or her assets simply by refusing to pay the nursing home bills of the institutionalized spouse.
The federal provision is known as “just say no” or the spousal refusal doctrine. Under this doctrine, if a spouse refuses to contribute his or her income or resources to pay the nursing home bill of the spouse applying for Medicaid, the ill spouse may still be able to qualify for Medicaid. The ill spouse must properly “assign” the right of support to the state. Once there has been a valid assignment of support rights, the Medicaid agency is required to determine the eligibility of the nursing home spouse based solely on the applicant’s own assets. The assets of the Community Spouse must be disregarded when making this eligibility determination. When such a situation occurs, the Medicaid agency can begin a legal proceeding to force the Community Spouse to pay the state back for the care of the institutionalized spouse. This process does not always happen because of the burden such a proceeding puts on the agency.
The spousal refusal doctrine has only been adopted by two states, New York and Florida. In 2005 a U.S. Court of Appeals in Connecticut upheld the right of spousal refusal in a case called Morenz v. Wilson-Coker. This decision allowed citizens of Connecticut to also take advantage of this doctrine.
The Connecticut legislature responded to the Morenz decision by revising the Connecticut General Statutes to prevent the use of the spousal refusal doctrine. Before Morenz, the statute stated that an assignment of support rights to the state was valid “provided the spouse of such person is unwilling or unable to provide the information necessary to determine eligibility for Medicaid.” Conn. Gen. Stat. § 17b-285 (2005). The revised statute allows assignment of support rights only if:
(1) Assets of the institutionalized person or person in need of institutionalized care do not exceed the Medicaid program asset limit; and
(2) Institutionalized person or person in need of institutionalized care cannot locate the community spouse; or the community spouse is unable to provide information regarding his or her own assets.
The statutory change made in response to Morenz, if valid, significantly limits the ability of Connecticut residents to take advantage of the spousal refusal doctrine. This became a pivotal issue in the case of Fortmann v. Starkowski, a spousal refusal case brought following the statutory revision. The husband assigned his rights of support to the state and was then determined to qualify for Medicaid. As a result, none of the assets he had previously transferred to his wife were used to pay the nursing home bill.
Assigning the right of support to the state essentially puts the burden of obtaining payment for nursing homes care onto the state. At issue in the Fortmann case was whether the limitations on assignment of support rights in the Connecticut law conflicted with the federal provision, in which case the state law would be invalidated.
The court’s final decision in Fortmann determined that Connecticut’s revised statute was valid. Consequently, Connecticut residents can no longer use the spousal refusal doctrine if the community spouse’s location is known and he or she can provide information about his or her assets. The court interpreted the federal law as giving states the power to define for themselves what constitutes a valid assignment of support by a Medicaid applicant. Therefore, Connecticut could freely determine that a valid assignment could only occur when a spouse’s location was unknown or the spouse could not provide required information about his or her assets.
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Henry C. Weatherby, Esq., CLU, ChFC, CEBS