Posted by Bishop L. Toups | In Elder Law
Yes, you can be responsible for your husband or your wife’s nursing home bills unless you find a competent elder law pro to figure out a way to not make you responsible. It happens quite often that one spouse has to go to a nursing home and the spouse who will stay at home (“community spouse”) has most of the assets. Or there’s only a small amount of assets remaining and these assets need to be preserved for the spouse who is remaining at home.
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If the community spouse engages a competent elder law pro early enough in the Medicaid process, the elder law pro can likely save all of the community spouse’s assets and not make the community spouse responsible for their spouses nursing home bills here in Florida. The very first thing the elder law pro will do is ask you how much you and your spouse have in assets and what type of assets you have. Some assets are already excluded from Florida Medicaid eligibility and may not need any planning at all.
When assets are not exempt from Medicaid eligibility, there are many ways for the community spouse to protect their assets from the nursing home. This article will cover two of the main categories: (1) the community spouse asset allowance, and (2) spousal refusal.
Florida Medicaid carves out a $130,000 (2021) exception—called the community spouse asset allowance—that allows the community spouse to keep $130,000 of non-exempt assets. Basically, the community spouse can transfer up to $130,000 of jointly owned assets that would cause the spouse applying for Florida Medicaid eligibility to be denied so that the $130,000 of jointly owned assets are completely preserved and exempt from Florida Medicaid eligibility. This is a great tool to use when married couples have mostly exempt assets, but they have a few remaining non-exempt assets that make the spouse qualifying for Florida nursing home Medicaid ineligible.
Example: John and Beth have been married for the past fifty years. John currently needs long term nursing home care here in Florida. John and Beth’s only remaining asset is a $120,000 joint investment account held at Charles Schwab. This $120,000 joint investment account currently disqualifies John from qualifying for Florida Medicaid since he can only have $2,000 in assets.
Solution: Beth can transfer all of the $120,000 to herself using a valid Florida Durable Power of Attorney before John applies for Medicaid. The transfer does not run afoul with the five-year look back period because spouses can transfer an unlimited amount of assets between themselves at any point in time.
Caution: The community spouse must do some additional estate planning to protect the $120,000 worth of assets in case the community spouse dies before the ill spouse. In this example, Beth should consult with a competent elder law pro about establishing a qualified special needs trust for John’s benefit so that if Beth dies before John, the $120,000 will flow to a qualified special needs trust for John and not have to be spent down.
The spouse who stays at home (“community spouse”) can utilize a planning technique called spousal refusal to save their assets when the other spouse has to go to a nursing home. Spousal refusal is when the community spouse refuses to financially support the spouse who is in the nursing home so that the community spouse will not have to pay the $9,000 to $12,000 per month in nursing home bills.
There’s a specific form called the Assignment of Right of Support and Refusal that the community spouse must fill out. The form is provided by DCF (Department of Children and Families) and states that the community spouse refuses to use their income or assets to support the spouse in the nursing home.
Example: Jim is 82 and must go into a nursing home. He is married to Joanne who is 72. It’s a second marriage for both spouses and Joanne has a net worth of $600,000. Jim has a net worth of $20,000. Joanne is scared to death of paying $9,000 to $12,000 a month for Jim’s nursing home.
Result: Joanne can transfer all of their assets to herself, sign a spousal refusal form, and she will not be financially liable for Jim’s nursing home expenses.
Tip: All of the assets must be transferred to the community spouse before the Medicaid application is submitted. Also, the spousal refusal form must also be submitted before. If both of these are not done before the application is submitted, the application will be denied.
Caution: If you use the spousal refusal option, make sure you do some proactive planning to make sure that none of the community spouse’s assets pass to the spouse in the nursing home should the community spouse die before the spouse in the nursing home. If the community spouse predeceases the spouse in the nursing home (which does happen), then the community spouse’s assets could pass to the nursing home spouse and would have to be spent down.
Q: If the community spouse exercises spousal refusal, can the State of Florida or Medicaid come after the community spouse to reimburse the State or Medicaid for the other spouse’s bills?
A: The answer to this question is likely no since Florida law states that neither spouse is liable for each other’s medical bills here in the state of Florida. However, the State of Florida does have the right to sue the community spouse for support on behalf of the spouse in the nursing home. This type of action has never occurred and likely would not prevail.
Q: If the community spouse uses spousal refusal, can the community spouse still pay for items for the spouse in the nursing home?
A: Yes. The community spouse can use whatever they want from their assets or income to pay for items the community spouse in the nursing home might need. For example, if the nursing home spouse needs a new TV or new clothes, the community spouse can use their own assets or income to purchase these items for the community spouse.
Q: If I elect to use spousal refusal, do I need to disclose my assets to Florida Medicaid?
A: No. There is no provision in the Florida Medicaid manual that requires the community spouse to disclose their assets when they use spousal refusal. However, many DCF districts that approve or deny Medicaid applications will demand for the community spouse to disclose their assets. We typically recommend disclosing assets in these situations since the community spouse’s assets do not count and it’s easier to disclose the assets than fight with DCF over non-disclosure.
Q: Will I still be entitled to my spouse’s income if I elect spousal refusal?
A: No. The community spouse who stays at home and elects spousal refusal is unable to receive any of the nursing home spouse’s monthly income once spousal refusal is elected.
Q: What happens if I elect spousal refusal but I die before my spouse in the nursing home?
A: This is a serious issue that you should consult with an elder law pro about. If you elect spousal refusal and die before the spouse in the nursing home, you must make sure that none of your assets pass to the nursing home spouse. If your assets pass to the nursing home spouse directly, the assets will make the spouse ineligible for Medicaid and will require the assets to be spent down before the nursing home spouse can be qualified for Florida Medicaid again.
Example: Jim is currently on Florida Medicaid and in a Florida nursing home that costs $12,000 per month. Delilah elected spousal refusal so she could preserve the $400,000 that she worked hard during her life to build. Delilah is involved in a terrible car accident and dies before Jim. She did not seek out an elder law pro to protect her assets if she died before Jim.
Result: All of Delilah’s $400,000 passed to Jim and made him ineligible for Florida Medicaid. All of Delilah’s $400,000 will have to be spent down and used before Jim can qualify for Florida Medicaid again. The $400,000 will be completely lost.
Tip: A Florida qualified special needs trust can protect assets if the community spouse predeceases the nursing home spouse. If Delilah had sought the counsel of an elder law pro and established a qualified special needs trust for Jim, all of the $400,000 would have passed to Jim’s special needs trust and not affected his Florida Medicaid eligibility. The $400,000 would have been saved.
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