LTC Bullet: Spousal Refusal Robs Taxpayers and the Poor

Tuesday, December 14, 2010


LTC Comment: Spousal refusal in New York robs taxpayers, hurts the poor, and profits the unworthy. Details after the ***news.*** [omitted]



LTC Comment: Spousal refusal is a squalid practice urged on otherwise responsible people by Medicaid planners in New York. It works like this. When your husband or wife needs expensive long-term care, transfer all his or her assets into your name and sign him or her up for Medicaid. And when Medicaid asks for your fair share of the cost, thumb your nose at the bureaucrats and say "Come and get me, chumps." In most cases, they won't, and you're home free. You keep all the money and Medicaid gets all the bills. The result is that taxpayers are hit with higher costs and the poor get lesser access and quality. Of course, the affluent and their attorneys make out like bandits.

Fortunately, most states don't permit spousal refusal. The biggest abusers are New York and Florida. But don't think you aren't paying through the nose for spousal refusal just because you don't reside in those states. As federal taxpayers, you're putting up 62% of the cost of Medicaid in New York. That's because supplemental federal matching funds in the "stimulus" and "health reform" laws bumped up the Empire State's FMAP (Federal Medical Assistance Percentage) from its usual 50% since October 2008.

On Friday, December 10, the New York Times ran a story about spousal refusal titled "Full Wallets, but Using Health Program for Poor." Here's a quote:

Last year, more than 1,200 people in New York City officially turned their backs on their husbands and wives to qualify for Medicaid, triple the number of people five years ago. The practice, known as "spousal refusal," is becoming more common as the population ages and the cost of nursing care rises - and it is coming under increasing attack by government officials looking to curb ballooning Medicaid expenses.

Check out the NYT story but here's all you really need to know about spousal refusal:

Spousal Refusal in a Nutshell*

o A couple, or more likely the well spouse and heirs, consult a Medicaid planning attorney about a chronically infirm husband or wife. Grandpa or grandma needs long-term care but the responsible family members prefer not to pay their fair share under the law.

o The lawyer says "no problem, here's what you can do." Just transfer everything they own from the ill spouse's name to the well spouse's name and apply for Medicaid for the now-impoverished ill spouse. (Medicaid allows interspousal asset transfers without triggering any eligibility penalty.)

o When Medicaid asks for the well spouse's share of the cost of care, "just say no." Under federal law, to wit Title XIX of the Social Security Act, Medicaid cannot refuse to cover the sick spouse's LTC bills just because the well spouse refuses to pay. "It's a great deal which you're a sucker not to take" is the Medicaid planners' sales pitch.

o Rest assured, however, that Congress never intended this rule to be used to dodge Medicaid's cost-sharing and spend down requirements in this way. It was designed instead to protect infirm elders from losing their Medicaid eligibility because of expropriation by a criminally irresponsible spouse.

o That's why Medicaid requires the ill spouse to assign to the state his or her rights to support from the well spouse when spousal refusal occurs. The state then has the right to sue the well spouse to recover the stolen wealth.

o But, unfortunately, a few states don't take that action as often as they should because of the political sensitivity of "chasing" well spouses. New York and Florida are the worst abusers.

o Former Nassau County (NY) Executive Tom Suozzi bucked the spousal refusal tide for awhile back in 2006 and the results showed just how expensive this irresponsible practice is for New York Medicaid and for federal taxpayers who share at least half its cost, 62% since the stimulus bumped up New York's FMAP.

o According to a New York Post article, Suozzi sued nine wealthy spousal refusers worth $13 million between them for a total of $570,709 which they should, could, and would have paid to offset Medicaid expenses for their spouses except for the spousal refusal dodge.**

o Lt. Governor Ravitch's "Report on Controlling Increases in the Cost of New York Medicaid" said spousal refusal involves "abuses that divert resources from Medicaid's legitimate purpose-serving as a safety net for the needy-and turn the program into an entitlement for the less needy. The State should re-examine these rules to re-balance the competing equities."***

o Pursuing every spousal refuser for recovery until the practice halts could recover millions of dollars for New York and federal taxpayers in the short run and avoid their wasteful expenditure in the first place going forward.

* For much more information about "spousal refusal," see "LTC Bullet: They're Baaack, Part IV: 'Abandon Your Spouse . . . Get Medicaid,'" Monday, October 29, 2001, and "LTC Bullet: Spousal Refusal: Who Wins? Who Loses?," Tuesday, April 18, 2006.

** Carl Campanile, "Suozzi $ocking it to Medicaid Millionaires," New York Post, April 10, 2006, copies available from The Post for $3.95.

*** Richard Ravitch, "Lieutenant Governor's Report on Controlling Increases in the Cost of New York Medicaid," letter to Governor David Patterson, September 20, 2010, p. 15.