Spousal Refusal to Pay for Nursing Home Costs
(2/7/09)- In 1988, Congress passed a law that was intended to protect healthy spouses with lower incomes and fewer independent assets from being impoverished by the cost of long-term care for his/her spouse. New York State extended that same benefit to people with illnesses such as Alzheimer's disease or cancer who receive care at home, rather than in a nursing home.
Recently federal Centers for Medicare and Medicaid Services (CMS) officials have ruled that the state was too generous in this interpretation of the law. Under this ruling the spouse must go to a nursing home, rather than continue to be cared for at home, or else the healthy spouse must contribute towards the upkeep of the sick spouse at home. The change was to take place in December 2008, but the New York Congressional delegation and Governor Patterson have won a delay from enforcement of the ruling until March 1.
President Barack Obama's administration has not indicated, as of this date, whether or not it would alter this ruling. The letter from the CMS officials was sent to state health officials in the fall of 2008 outlined a legal ruling that declared that couples in which both partners lived at home are not entitled to the same protection as when one of them is residing in a nursing home.
"They're saying if you put your spouse in a nursing home, you're going to keep more income than if you keep your spouse out of a nursing home," said Mark Kissinger, deputy commissioner of long-term care for the state Health Department. "That's completely opposite to public policy and research of the last 10 years."
(4/21/06)- Nassau County executive Thomas R. Suozzi has called upon the state legislature to eliminate the "spousal refusal" loophole, that is causing Medicaid millions of dollars. There are only three states in the U.S. that allow the right of "spousal refusal", with the other two states being Florida and Connecticut.
"Spousal refusal" is a maneuver that causes Medicaid to foot the bill for nursing home care for patients whose families can afford it themselves. Under this maneuver, a couple shifts its assets to the healthy partner, who invokes the right of "spousal refusal" and declines to provide financial support for the partner who is in the nursing home. As a result of this maneuver, Medicaid must foot the bill.
New York State regulations do permit the local governments to challenge the refusal and seek reimbursement through the court system. In the past three years, Nassau county officials have pursued 282 cases, sued 49 relatives and recovered $2.5 million so far. Local governments have little incentive to seek these reimbursements, because 90% of the money that is recovered must be passed on to state and federal agencies.
Under New York State regulations, a couple is allowed to keep a home, a vehicle and $99,540 in other assets and still qualify for Medicaid payment of the nursing home costs, without invoking "spousal refusal".
(3/10/03)- Former Mayor Rudy Giuliani sought to have New York law changed so as to afford residents of the state more protection against having their assets seized when the government is paying for a spouse's nursing home costs. One of the discrepancies that he alluded to was the fact that homes are excluded when computing a couple's total assets for Medicaid purposes. That is unfair to many New York City residents who have cash, stocks or other disposable assets but do not own their own home.
In general the definition that is used to determine whether or not an individual is eligible for Medicaid is that the individual has no more than $2,000 in assets, excluding their house and cars. Medicaid paid $47 billion for nursing home care in 2001. With the states seeing their budget deficits growing by leaps and bounds, many of them are attempting to restrict the amount they spend on Medicaid. Connecticut, where about 20% of the state's spending is for Medicaid, has proposed a regulation that would make it harder for its residents to shelter assets when transfers are made to impoverish an individual who is going into a nursing home. Under Medicaid law the federal government must approve the regulations that a state tries to put into effect, so the state must now wait and see what the U.S. government will allow them to do.
Under current Medicaid rules, a state can force an applicant to wait for a period of time after the assets are transferred. Currently there is a three-year timeframe for the government to look back at when assets are transferred. Under the proposed Connecticut change a formula is used to determine how much of the costs for the nursing home will be borne by the applicant. That amount is determined by dividing the amount of money or the value of the asset transferred by the average monthly cost of the nursing home cost in the state. Thus under the proposed Connecticut rule, where the state has an average nursing home bill of $7,062 a month, it would take 10 months before $70,062 is used up. If the asset value of the transfer is less than $70,062, you can compute how long it would take before the state starts to pick up the expense through Medicaid.
In 2000, Minnesota made a similar waiver request, but it was denied by the Clinton administration because it was more restrictive than the limitations that Congress already had in place. If Connecticut receives approval from the federal government, Kansas has indicated that it would approve a similar type of rule for its residents who go into nursing homes.
The NY Times, September 14, 2000 edition, carried an article entitled "City Called Too Aggressive On Health Care Repayment: Financial Threat to Middle Class Is Seen". It appears that the New York City is trying to recover some of the cost for nursing homes from a spouse, if the married couple's assets exceed $84,120 or they have a monthly income of more than $2,103. NY State law requires the state and city government to pay for long term institutional care for people who need it, even if they or their spouses have assets that they refuse to turn over to the government. Bruce C. Vladeck, former administer of the federal Health Care Financing Administration (HCFA), said that the city has the option to collect, but is not required to do so. Even the act of "trying to collect" could put a severe stress on the spouse not institutionalized.
The NY Times article states: "Human Resource officials said they provide nursing home care to more than 40,000 New Yorkers (0.57% of the total residents), at an annual cost of more than $2.6 billion. Of the approximately 1,200 people who apply for assistance each year, about 200 to 300 have income exceeding the limits. It is these cases that the city seeks repayment."
"Spousal refusal? How can I think of this for my husband? We have supported each other all our lives. Abandon him now, when he needs me the most." This was the tone of our interview with Mrs. MK recently. MK is a diminutive person whose stature belies her energy and productivity. She had previously contacted us about a situation with her husband who, following a stroke, was being denied certain rehabilitative services in a nursing home facility because they felt it was not feasible. We shared information with her about our experience with our mother in the nursing home.
A follow-up contact found her quite distressed. Her husband was still in the nursing home, with left-side paralysis, garbled speech, severe cognitive decline and in need of twenty-four hour attendant services. His 100 days of coverage under full and partial Medicare coverage was over and she found herself straddled with a daily nursing home fee of $375. She and her husband had saved some money for their retirement, but it looked like they would have to spend it for his care and she would have very little for her needs.
She seemed totally overwhelmed by this turn of events. Her husband needed the services of the nursing home and he appeared to be benefiting from these services. He was being given medical attention, especially for depression following his stroke. Daily physical therapy seemed to be helping restore some limited physical functioning. MK had taken it upon herself to supply "cognitive therapy" and supportive therapy via her daily contacts with her husband. She was spending up to 6 hours with him daily, constantly talking, showing him numbers and letters and asking him to repeat them, encouraging him to be motivated to get better etc.
While somewhat elated even by his slow progress, she wondered how much longer she could afford the nursing home and also deal with the psychological toll this was causing her. She knew if she exhausted their funds, he could go on Medicaid. Her Social Security was not enough for her to live on. They had lived a frugal but fulfilling life, dedicated to their passion for ballet. In fact, prior to his stroke, they were compiling a history of dance and were lecturers on this topic.
She had heard about the concept of "spousal refusal" from the social workers at the nursing home but wondered about its legality and had to deal with her moral feelings "about abandoning her husband". Spousal refusal involves a spouse refusing to turn the ailing incapacitated partner's assets over to the government when that partner needed long term institutional care. NY States highest court, the Court of Appeals in a unanimous decision on June 8th, 2000, ruled that the state couldn't refuse to provide medical coverage for a nursing home or other long-term care for an individual who is not capable of transferring his/her assets because of their illness. In essence, the court ruled that the individual would have transferred assets to the spouse if he/she were not incapacitated and would have preferred the state to pay for their condition rather than the family.
This statutory interpretation will shield a spouses assets from Medicaid eligibility in cases of incapacitation of the other spouse. The state cannot block the transfer of all the assets to the spouse not incapacitated. The NY Times, June 9, 2000, quoted Juanita Scarlett, a spokeswoman for the New York State attorney generals office as saying "It was a close case of statutory interpretation but we respect the courts decision." People who are incapacitated and in need of long-term medical care can dispose of their assets and qualify for Medicaid under the conditions of this ruling.
Thus under New York law assets may be transferred from a spouse to the other spouse before going into a nursing home, and the spouse receiving the assets may refuse to pay the costs for the stay. Another device that is coming into usage in these types of situations is where an large annuity is purchased with the families assets and the income of the annuity goes to the spouse who is not hospitalized. The income stream from the annuity need not be used to pay for the costs of the nursing home care.
If you have any questions about this, we suggest you consult your lawyer or get in touch with someone skilled in geriatric law by contacting your local bar association.
FOR AN INFORMATIVE AND PERSONAL ARTICLE ON PRACTICAL SUGGESTIONS WHEN SELECTING A NURSING HOME SEE OUR ARTICLE "How to Select a Nursing Home"
Allan Rubin and Harold Rubin, MS, ABD, CRC and Guest Lecturer
updated February 7, 2009
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