NAELA Presentation Excerpts and CLTCF Comments 

Krooks: "Our goal is to alert you to the fact that there is a federal statute on the books that's been on the books for quite some time and to suggest to you that perhaps there are ways for you to implement this particular statute in your state. . . . It is our major goal here today to try and make it globally applicable to you regardless of which state you practice in.

"I do want to begin by reminding all of you that Dan and I recognize that Medicaid is the payor of last resort. We strongly recommend to all of our clients that they purchase long-term care insurance. And the techniques that we'll be discussing here today are only to be utilized when all other options have been exhausted." . . .

CLTCF Comment: The preceding statement about long-term care insurance was greeted by loud tittering and sniggers from the audience. Why? Because, everyone present knew the point was made only for the benefit of your tenacious reporters in the audience. Howard Krooks, Bernie's brother and law partner, recently commented at another conference that most people are too young or too old, too rich or too poor to buy long-term care insurance. Ask any long-term care insurance agents how many referrals they've ever received from elder law attorneys and see what they say. Few or none. Every long-term care insurance policy sold is a Medicaid planning client lost. That's why many Medicaid planners pay nothing but lip service to private LTC insurance.

Fish: "We are faced with a mystery . . . it is a mystery that really puzzles me, and the question is the following, how could there be a federal statute of great benefit to seniors which is recognized and followed in only a few jurisdictions? How could that be possible? And the statute that I am referring to is 42 USC § 1396r-5(c)(3) which briefly reads as follows and this is a Medicaid eligibility statute

"Assignment of support rights. The institutionalized spouse shall not be ineligible by reason of resources determined under paragraph (2) to be available for the cost of care where---

"(A) the institutionalized spouse has assigned to the State any rights to support from the community spouse;

"(B) the institutionalized spouse lacks the ability to execute an assignment due to physical or mental impairment but the State has the right to bring a support proceeding against a community spouse without such assignment; or

"(C) the State determines that denial of eligibility would work an undue hardship.

"That is the statute in question. That is the mystery that we are asking you for some assistance in solving. Why is it that in most of your states this statute is not available to the husbands and wives who fit within its parameters. It is a clear and unambiguous statute. It is not an interpretation by NAELA. It is not a HCFA letter. It is not an administrative directive. It is a clear and unambiguous federal statute passed after extensive hearings were held by the United States Congress, passed by both houses, and signed by the President. The Code of Professional Responsibility applies to all of us and the hallmark I would think in this particular situation where the code applies is our responsibility to make every legal option available to our clients and for our clients to decide which avenue they decide to pursue once all of the options have been made available to them." . . .

"The thesis that we are presenting today is to ask you to have a more open mind about this issue, to approach it with the tabula rasa, with the clean slate, and to go with us through this discussion, and ask yourself today, and ask yourself in the days that follow whether or not there are particular situations in your own practice where husbands and wives are presenting themselves to you, they are your clients, and where this topic might benefit them, and we're asking that you have that discussion with them and see if they select this as an alternative route and that you take a look within your own state and see what barriers there are to the implementation of this federal statute and that this be an ongoing discussion and dialogue within NAELA over the next several years." . . .

Krooks: "The linchpin for all of this is that in all states married persons are legally responsible to pay for the cost of the health care of their spouses. And this is generally accepted without regard to whether the spouse had always kept his or her assets separate, whether they were inherited or gifted or community property. So, what makes this planning option important is that if you are married you are responsible to pay for the health care of your spouse." . . .

Fish: "What Congress said [in MCCA '88] was we're setting these [income and asset] floors with the figures that you just heard [up to $2,175 per month of income plus $87,000 in assets] and then Congress went further and said that eligibility for the nursing home spouse cannot be denied if there is a community spouse who has resources and/or income above the amounts that you just saw, eligibility cannot be denied if the community spouse refuses to make the excess resources and income available and the institutionalized spouse assigns his or her right of support from the community spouses to the state. If you have those two elements, you have a refusal to make available the excess income and resources and you have an assignment by the institutionalized spouse, you then may not deny eligibility to the institutionalized spouse. You can go above the floor that we just described if you have the refusal and the assignment. Again, I just want to stress what you are seeing is simply the statute." . . .

Krooks: "This federal statute says Medicaid shall (and shall under Black's law dictionary means must) must be granted to an institutionalized spouse irrespective of the assets of the community spouse so long as the proper procedures are followed, the assignment of support is executed and the community spouse cooperates in providing the documentation. So a spousal refusal is not a refusal to provide documentation. The community spouse must provide the documentation. It is simply a refusal to contribute to the cost of medical care of the institutionalized spouse." . . .

"To our knowledge there are two states [New York and Florida] and the District of Columbia where elder law practitioners are able to utilize on a practical level spousal refusal. We've included a form of spousal refusal in the materials and what I'd like to do is just show you how simple it is . . . ."

CLTCF Comment: The spousal refusal form supplied among Fish and Krooks' handouts reads in pertinent part as follows: "I declare that I refuse to make my income and/or resources available for the cost of necessary medical care and service for the Medicaid applicant/recipient listed above." This statement is followed by a line for the "signature of the legally responsible relative" which is nearly always the spouse.

"The eligibility is right before you, 1396r-5, that is a slam dunk. There is no question that you can gain eligibility. . . . In order to gain eligibility, do your Medicaid application the way you always do it, however it's done in your local county. You need to make sure that the institutionalized spouse is otherwise eligible. In our state, in order to be eligible, you have to have less than $3700 approximately. In some states, it's $2000. Whatever the number is in your state, that amount is the limit on the amount of money the institutionalized spouse can have. So, as a precursor to filing the Medicaid application, the first step in a spousal refusal transaction is the assets have to be transferred. If there are any assets in the name of the institutionalized spouse, they have to be transferred to the community spouse. Under federal law, there is no period of ineligibility with respect to transfers between spouses. That's the federal law. So if you have all the assets already in the name of the community spouse, because that's the way it was, then you don’t need to take that first step. If the assets are either joint or all in the name of the institutionalized spouse, they need to be transferred to the community spouse." . . .

CLTCF Comment: Please understand what is being recommended here. Fish and Krooks are advising their colleagues to propose to their clients that they transfer all assets held under the name of the sick spouse into the legal possession of the well spouse in the community. Under federal law, this can be done with impunity before a Medicaid application is filed thus leaving the Medicaid applicant impoverished and, voila', financially eligible for public welfare. The next step, of course, is for the community spouse to refuse to contribute any part of the institutionalized spouse's newly expropriated wealth toward his or her medical care.

"The preferred approach, I feel, is to submit the spousal refusal form with the Medicaid application. Don't wait for the caseworker to ask for it. Submit your application. The assets have already been moved to the name of the community spouse if they needed to be, if they were in the name of the institutionalized spouse and you submit this form. It’s not even a paragraph. It simply states that a Medicaid application has been made for my husband. I'm the spouse of the applicant. Here's my Social Security number. And it says I declare and give notice that I refuse to make my income and resources available for any cost of his Medical care." . . .

"Now, the second component in 1396r-5 . . . is that the institutionalized spouse has to assign the right of support. Remember the premise was husband and wife are responsible to pay for the cost of their care. So the wife still has to pay for the cost of the husband's care and vice versa. So the husband in the nursing home has a right to sue the spouse in the community for support, because they're married. After a wife in the community refuses to pay for the cost of his care, he can sue her. As a condition of Medicaid eligibility, he has to assign that support right to Medicaid, so that they can step into his shoes and pursue whatever recovery action they're entitled to pursue under the law. So those are the two components. She refuses and submits the assignment of support and we've also given you an assignment of support form. Okay, it's in plain English. The form is there. So if your state doesn't have these forms, use the ones from Florida or New York. I think we've given you them in the materials. . . . But there's no rocket science here. Simple form that says I assign my right to support." . . .

"The federal protection for spousal refusal applies to people in medical institutions or nursing facilities. There is no federally authorized right of spousal refusal for home care, however, for waivered programs such as what we have in New York called the Lombardi Program, it’s a nursing home without walls, it does apply because by statute those are really nursing home programs, so if it is a waivered program it will be covered under spousal refusal. If its home care, it will not be, nonwaivered home care." . . .

"Dan, would you talk a little bit about, look, I'm married to somebody for 50 years, they get an illness, I've always taken care of her, I'm just going to sign this form that says I don't want to have anything to do with her, how do you deal with that with a client?"

Fish: "That is a very great emotional issue, asking someone to sign that form, as simple as it appears to you and I, it is a very, very great barrier to have someone, and I'm going to put it in quotation marks because this is the way clients view it and the way they feel, that it is an 'abandonment.' There clearly is some feeling and I am wondering if this is some explanation for why we are not seeing this statute applied more generally. There is a feeling that there is a stigma that is attached to it that goes beyond this statute itself, that it means that you couldn't visit your wife in the nursing home, or that this was tantamount to a divorce, none of that is true. The refusal form stands by itself, but I think that there is some counseling that will have to accompany this and if we can just come back to the point where we began, Bernie, neither you nor I said that this was something that we were forcing people to do, this was simply an option that we were discussing and I think that you are correct that this emotional issue, not a legal issue, the emotional issue will be on the table and I think each one of us will deal with that individually." . . .

Krooks: "It's going to take someone to challenge it. That's what we had. Dan and I did a presentation in Florida in '97 or '98 before they had spousal refusal and now they have it. It just take's the lawyer to have the right case." . . .

"And there is no question that the second half of this discussion is the fact that while the eligibility may not be affected, the local Department of Social Services may bring a lawsuit. And this would be something which would have to be discussed very openly with the client that eligibility is only half of the battle."

Krooks: "And we will speak in about ten minutes about issues of when the lawsuit is commenced, would any of us really subject our client to a deposition and how you deal with those issues, how the cases are settled, what their standard is for repayment and the like. We will get to that." . . .

Krooks: "This is where you can really be of service to your client. We tell all of our clients in writing and also several times throughout the course of our representation of them that if you do the spousal refusal, you will in all likelihood receive a letter from Medicaid's legal department saying that they have some right of recovery, and look, for a senior citizen to either receive a summons and complaint or a demand letter some kind of dunning letter, I mean, that's a traumatic experience. We can't prevent it from happening but we can sort of soften it. We can let them know in advance that it is likely to happen, that when they get it, they should send it on over to us, and once they do, we notify Medicaid that all future communication should be between our office and Medicaid so that they're not bombarded with letters and further requests for payment."

CLTCF Comment: The remainder of the seminar dealt with "post-eligibility" treatment of assets. In other words, how can the community spouse jettison or protect additional assets to prevent or minimize the state's legal right and ability to pursue recovery of Medicaid expenses in the future? Bottom line, any married person in New York, Florida or D.C. can easily avoid Medicaid nursing home eligibility rules and qualify quickly and easily without spending down. The implications of this fact for the viability of the Medicaid program as a long-term care financing source for the poor are obvious. The implications for the marketability of private long-term care financing alternatives, such as home equity conversion or long-term care insurance, should be equally obvious.