Earlier this week a had a client come in concerned about his wife's mental and physical decline. The wife had advancing dementia and was in the nursing home. The husband was concerned that all of their assets would be used for his wife's care. In this situation, the husband living at home is known as the "community spouse" and he is allowed to own a house, a car, and up to $128,640 in countable assets (2020). Here is a list of income and asset requirements for Florida Medicaid purposes. In this case, the husband's countable assets were above the limit to allow his wife to qualify for Medicaid.
In discussing options for protecting his assets while getting his wife onto Medicaid, the husband brought up the concept of a "Medicaid Divorce." The husband had researched this on the internet and had some questions on what this is and how it worked.
I had never actually heard or used the term "Medicaid divorce" so I thought he was referring to a planning technique we generally refer to as "spousal refusal." Spousal refusal is a legal way to protect assets for the community spouse in certain situations. We do not take this technique lightly as it means that the husband would sign a statement saying that he refuses to support his wife. When this is done, the state of Florida would count institutionalized spouse (the spouse in the nursing home) as a single person for Medicaid purposes, which means the community spouse (the husband) would not have to "spend down" his assets until reaching the $128,640 mark (2020). We are frequently hesitant to bring this up as an option as there is an unsavory aspect to tell a spouse that they should sign paperwork that they are not going to support their loved ones.
As we discussed the client's information further, the husband had lots of questions on the Medicaid divorce, who would know this happened, and a number of other things. After going through this for a while, I realized the husband thought that an actual divorce would occur with the Florida court system. This could not be furthest from the truth! We would never encourage a married couple to divorce over Medicaid/nursing home expenses. There are plenty of planning techniques to help the community spouse get their loved ones onto Medicaid, but these options do not include any kind of divorce! The moral of the story is do not believe everything you read on the internet! The husband was very sad that he would either have to divorce his wife or lose all of their assets to the nursing home, and I got to explain that this was not the case at all as he had a good elder law attorney, much to his relief!
With the Medicaid planning technique known as spousal refusal, the community spouse would typically sign a statement that he or she refuses to support the sick spouse. When this is done, the sick spouse is treated as a single person for Medicaid purposes, meaning the assets of the community spouse are not counted as assets for Medicaid purposes. The state of Florida is also assigned the right to sue the community spouse for refusing to support his or her spouse. Using spousal refusal would likely take place, for instance, in the event of a second marriage situation.
Another important aspect of having your spouse in the nursing home is looking at how much income the community spouse (the spouse at home) will be able to keep. Learn more about spousal diversion and minimum income rules on this webpage.
If you are dealing with a sick spouse or your parents are going through this, please know that you should see a Board Certified Elder Law attorney to assist with planning. It is never too late to plan and protect assets, but you would need to see a good attorney to help. We offer free monthly seminars on Medicaid and Estate Planning if you want to learn more about Medicaid, asset protection and more.
People who read this may also want to review the following:
- Will I lose my home if I go into the nursing home?
- My elder just went to the nursing home - what will happen next?
- My elder is already in the nursing home - can I protect assets now?
- Medicaid Spend-Down Planning in Florida