Spousal Refusal in Medicaid Planning
What is Spousal Refusal?
Spousal refusal, also known as "spousal impoverishment refusal," is a Medicaid planning strategy that allows the healthy spouse (the “community spouse”) to protect their income and assets while the other spouse applies for Medicaid to cover long-term care costs.
Under Medicaid rules, the community spouse is typically required to contribute part of their income and assets toward the care of the spouse applying for Medicaid (the “institutionalized spouse”). Spousal refusal allows the community spouse to formally decline this responsibility, enabling the institutionalized spouse to qualify for Medicaid based on their own income and assets alone.
How Does Spousal Refusal Work?
Declaring Refusal
The community spouse signs a spousal refusal form and submits it to Medicaid as part of the application process. This declaration states that they are not making their income or assets available to the institutionalized spouse.Medicaid Approval
Medicaid evaluates the institutionalized spouse’s eligibility based solely on their personal income and assets, excluding those of the refusing spouse.Potential Recovery by Medicaid
While Medicaid will approve the institutionalized spouse’s benefits, the program retains the right to seek reimbursement from the community spouse. This is typically done through a legal action called “right of recovery,” but in practice, this step is not always pursued or may result in a negotiated settlement.
Benefits of Spousal Refusal
1. Protects Community Spouse’s Resources
The community spouse can retain their income and assets to maintain their standard of living without being forced to deplete them for the institutionalized spouse’s care.
2. Accelerates Medicaid Eligibility
Spousal refusal can expedite the institutionalized spouse’s eligibility for Medicaid, ensuring timely access to critical care.
3. Avoids Financial Hardship
This strategy prevents the community spouse from facing financial instability by preserving their own income and savings.
Why Professional Guidance is Essential
Spousal refusal is a complex strategy with significant legal and financial implications. Without proper planning, it can lead to unintended consequences, including litigation or disqualification from Medicaid.
How Can MLG Help?
At MLG, we have extensive experience in Medicaid planning, including spousal refusal strategies. Our team can help you understand the benefits, risks, and potential outcomes, ensuring your family’s assets are protected while securing the care your loved one needs.
To learn more about spousal refusal and other Medicaid planning strategies, contact MLG and schedule your complimentary consultation today.
