LTC Bullet: They're Baaack, Part IV: "Abandon Your Spouse . . . Get Medicaid"

Wednesday October 31, 2001


(Occasionally, when an LTC Bullet is unusually long or complex, we forewarn readers so you can plan your reading time accordingly. This Bullet qualifies on both accounts. Nevertheless, it contains critically important material available nowhere else that will reward careful study.)

As the next major conference of the National Academy of Elder Law Attorneys (NAELA) approaches (2001 Advanced Elder Law Institute, November 1-4, 2001 in St. Louis, MO), we thought it appropriate to resume our "They’re Baaack" series to remind our readership how Medicaid planners train each other on the latest successful techniques to qualify quickly for Medicaid without spending down. (Parts I-III of the Center’s "They’re Baaack" series are archived at Although the official agenda for the upcoming program in St. Louis barely mentions Medicaid (a sure sign the Center for LTC Financing’s critiques are having an impact), Center staff will review audio tapes of conference sessions to make sure no egregious Medicaid planning advice creeps in. If it does, you’ll be the first to hear about it!

As many of you are aware, Medicaid estate planning is the process of artificially impoverishing prosperous people to qualify them for welfare nursing home benefits. Medicaid planning overburdens the public assistance program charged with delivering long-term care to the poor and discourages responsible long-term care planning by everyone else. Nevertheless, thousands of attorneys across the United States make six-figure incomes by promoting this dubious practice.

The damage Medicaid planning does to our LTC system for the poor remains hidden from most Americans. Medicaid planning is conducted behind closed doors in attorneys' office throughout the country. Its practitioners are protected by the lawyer-client privilege, so we rarely hear from them. Their clients, usually adult children of the frail elderly, are often too ashamed to admit what they've done. The victims of Medicaid planning almost never have a voice, as they are frequently stricken by cognitive impairment incidental to Alzheimer's Disease, stroke, or some other chronic illness. Neither the nursing homes nor the Medicaid program can speak out about egregious examples of intentional impoverishment because of confidentiality rules. So Medicaid planning remains the secret of those who profiteer on the poverty program.

Our "They're Baaack" series of LTC Bullets attempts to enlighten public opinion about this spectacle by shining a spotlight on Medicaid estate planning. We are bringing you verbatim transcripts of actual Medicaid planning seminars conducted at NAELA’s 2001 Symposium on Elder in Vancouver, British Columbia from April 18 to 21, 2001. We invite you to conclude for yourselves whether these technically legal practices are ethically culpable or not. We ask you to consider more humane public policy alternatives such as the Center for Long-Term Care Financing's LTC Choice proposal (

Today's Bullet highlights a session called "Spousal Refusal" delivered by two veteran Medicaid planners, Daniel G. Fish and Bernard A. Krooks. Both Fish and Krooks are Certified Elder Law Attorneys (CELAs) and partners in (different) New York City law firms. Fish is a former President of NAELA; Krooks is NAELA's President-Elect. Spousal Refusal is a method to qualify for Medicaid nursing home benefits that involves one elderly spouse abandoning another. Fish, Krooks and their colleagues use spousal refusal extensively in New York. They have already exported the practice to Florida. They advocate that NAELA attorneys expand the practice of spousal refusal throughout the United States. Obviously, if they succeed, more and more people will end up in nursing homes on welfare who could have afforded quality care in more desirable settings and fewer and fewer younger people will see the need to plan early and save, invest or insure for the risk of long-term care. As the Medicaid program is funded jointly by each state and the federal government, taxpayers throughout the United States are paying the cost of spousal refusal through their federal income taxes whether or not their own states allow the practice.

To understand the quoted excerpts that follow, some background and explanation will help. Before 1988, Medicaid eligibility rules often caused community spouses of institutionalized recipients to become impoverished. The Medicare Catastrophic Coverage Act of 1988 (MCCA '88) eliminated this problem by allowing community spouses to retain substantial income and assets without causing their institutionalized spouses to lose Medicaid eligibility. The original income and asset allowances have increased with inflation for 13 years and now stand at up to $2,175 per month in income and $87,000 in assets, far above the poverty level. (Actually, much more--literally hundreds of thousands of dollars--can often be sheltered by using the "transfer assets before income" technique in states which allow it.) Congress and President Bush the First were concerned, however, that in some rare circumstances, a community spouse might take all of the couple's wealth and refuse to contribute anything to the support of the spouse in the nursing home. Therefore, MCCA '88 also contained a provision that guaranteed the institutionalized spouse's right to Medicaid nursing home benefits even if the community spouse withheld all support as long as the institutionalized spouse assigned his or her legal right to support to the state. That way, if the community spouse refused to support the institutionalized spouse, the state Medicaid program could step into the shoes of the institutionalized spouse and legally compel him or her to do so. No one expected this to happen often. It was a safeguard just in case.

The essence of spousal refusal, as practiced by Medicaid planners like Fish and Krooks, is to turn this well-intentioned safeguard into a commonplace planning technique, a fountain of benefits for their well-to-do clients. They routinely encourage community spouses (1) to refuse to support their spouses on Medicaid, (2) to take all of the couple's money (less attorney's fees of course) leaving the institutionalized spouse totally impoverished, (3) to refuse to contribute anything toward the care of the institutionalized spouse, and (4) to plan early and carefully to avoid or minimize the state's later recovery of Medicaid expenses paid on behalf of the institutionalized spouse. In a nutshell: just say no, thumb your nose at the Medicaid authorities, make the taxpayers pay the bills, let the nursing home get by on starvation-level Medicaid reimbursements, and do whatever you can to dodge the responsibility to pay the system back someday.

Care to know how Fish and Krooks urged their colleagues from all over the United States to get in on the act? Go to for transcribed excerpts. Ellipses (. . .) indicate where sections of the presentation have been omitted for brevity. We provide "CLTCF Comments" where explanations or interpretations are needed.

Stay tuned for an upcoming LTC Bullet which exposes yet another outrageous Medicaid planning strategy --advising clients to divorce--to acquire taxpayer funded long-term care.